Concurrence, régulation, service public

Competition, Regulation and Public Service. Variations around the Case of Electricity
In France, “public institutions” have long been considered as powerful vectors of social and economic development. Today they are subject to several criticisms, all of which stem from the strong current of free market liberalism which sings the praises of competition in every sector and consequently calls for the dismantling of regulated monopolies.
The debate does not simply oppose Latins who are attached to the notion of a public sector to Anglo-Saxons who prefer to ignore it. More acutely, it pits the Brussels Commission, favouring market liberalism, against defenders of public sector “à la française” who are presently looking for compromises through new concepts such as public utilities and network enterprises.
Marcel Boiteux, who is the incarnation of the high-rank public servants who participated in developing the French public sector, gives us his point of view. His first objective is to dissipate misunderstandings due to the improper confusion among concepts, such as monopoly, public enterprise, public service, and their assimilation to “network enterprises”. Then, attacking the basis of the problem, he invites us to consider that essentially two distinct questions must be addressed : the regulation of monopolies and the duties of public service.
While acknowledging that free competition is often the best regulator, he underlines the peculiar circumstances which constitute “natural monopoly” and to which the principle of atomistic competition cannot apply. This demonstration suggests caution in the hasty assumption of similarity among all “network enterprises”. He addresses the issue of integration versus dissociation between the operational and regulatory roles, concluding that an integrated regulator would be more enlightening for an agency such as the EDF, but that what is good for electricity may not be as good for telecommunications and transportation.
Marcel Boiteux then defines what he means by “public service” emphasizing the economic problem particular to public goods which means that they require subsidy or tariff equalization to be financially viable. The second of these has some significant advantages, in his view, but implies a delimitation of territory, that is to say, the territory of a nation-state rather than the European Union, through a “deregulation” of public markets ? Should we let the market develop by itself on foreign markets, up-stream and down-stream of the natural monopoly ?