Opening up Public Services to Competition by Putting Them Out to Tender: An Evaluation

Philippe Bance

Annals of Public and Cooperative Economics, 2003, vol. 74, issue 1, 33-61

Abstract: This article examines the effects of systematizing tendering procedures when awarding public service concessions. The opening up of the water supply industry to competition is used by way of illustration. Results show that arguments in favour of systematization are not robust when focusing solely on the expected benefits of the liberalization process. The peculiarities of the contract relationship in the delegation of public services, the mobilization of specific assets, and the long duration and incompleteness of the contracts invalidate this type of argument and expose public authorities to the opportunism of operators. The efficiency of awarding public services concessions relies on cost–benefit analysis, taking into account sectoral aspects as well as specificities of the contracting organizations and structures. The public service culture of these organizations is in this respect a key factor in the choice of efficient organizations since it conditions their ability to internalize the mission of fulfilling the public interest.

Date: 2003
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