Public Sector Policy Analysis

Abstract

Increasingly, government policies are criticized for failing to achieve their objectives. It is not always appropriate simply to call for deregulation. Often deregulation is not politically feasible. Also, the ‘invisible hand’ does not always work better than regulation as, for example, where environmental quality is concerned. In those cases regulation will be with us for some time to come. Of course, the performance of regulatory institutions should continually be evaluated. If performance is not satisfactory more efficient policies have to be designed. Positive as well as normative analysis of regulatory institutions was presented at a conference held at Berlin in July 1981. A selection of papers addressing three major topics is contained in this volume:

• pricing issues in the public sector;

• investment and pricing under regulation;

• public decision-making.

At leaśt as long as there are public enterprises, the pricing issues discussed in Part II are of interest to policy-makers and economists. Gerald R. Faulhaber summarizes the essentials of the public enterprise pricing problem taking into account the recent literature. He points out that rate regulation has often led to substantial efficiency losses. In some cases welfare losses result from distribution policies.