Self-assessment or public debate? - evaluating the liberalisation of network services in the EU and USA

Hall, David (2007) Self-assessment or public debate? - evaluating the liberalisation of network services in the EU and USA. Discussion Paper. PSIRU, London, UK.

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Abstract

The European Union’s policies towards public services continue to be based around the drive to expand the internal market. One aspect of this is the set of Directives which require member states to liberalise the structure of the ‘network’ public services – electricity, gas, post, telecoms, rail, air, and urban transport. These sectors are of great economic and social importance, accounting for 7.5% of the whole output of the EU, employing 10.5 million people - over 5% of the EU workforce, and providing vital services for the entire population.
The European Commission (EC) maintains that liberalisation in these sectors brings consumer choice and competition, and as a result lower prices and improvements in efficiency, which benefit both industry and consumers. It produces its own annual report evaluating these policies, and is satisfied that these reports justify the continuation of existing policies and indeed further extension of liberalisation.
This paper discusses three main issues:
- the lack of public debate in Europe, compared with vigorous debate and policy revision in the USA
- comparative evidence from the USA on the effects of liberalisation on prices
- the uncertain economic effects of liberalisation compared with the benefits of public investment through the cohesion funds
Finally, it discusses the criteria that could be used in reviewing and revising European public policies in these services.

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