Co-Production: An Alternative to the Partial Privatization Processes in Italy and Norway

Abstract

Market reforms such as privatization are often put in place with the aim of improving economic efficiency, reducing the role of the state and increasing the degree of private sector competition. These reforms are expected to have a positive effect on the local economy (Megginson and Jeffry, 2001). However, the measure of the success of privatization is often very narrow (Kikeri and Nellis, 2001). In fact, concerns have been raised in many cases about the privatization process in terms of the effective provision/production of services and accountability to citizens. Moreover, in many countries (e.g., Italy and Norway), public service providers are still controlled by the state, and there is therefore a situation that we could call partial privatization. We can talk of partial privatization when two characteristics are satisfied: restructuring actions are undertaken by the state; in order to create joint stock companies that are supposed to produce and/or provide public services more efficiently; after formal privatization has taken place (the restructuring of the public sector apparatus according to business-style guidelines), there is no substantial market competition, meaning that the situation is effectively a state monopoly. This chapter emphasizes the attributes and limits of the privatization process and examines the debates surrounding it. It suggests that co-production may be a reasonable alternative to the privatization of public goods and services.