Public vs private

From REBAG

Over the last decade capitalistic economies have shifted away from the public provision of a host of services, mostly public utilities, towards their private provision. Such trend has been beneficial insofar as market competition provides incentives that are typically absent within a (public) regulated monopoly. However, this has come at the cost of duplication of essential facilities, of considerable regulatory overhead, of significant transaction costs, and of search costs by consumers who have to extricate themselves among often complicated competing tariff plans.

The optimal choice on the mode of provision of a given service should depend, among other factors, on a balancing of the benefits and costs of the available alternatives. The introduction of Rebag could modify the present perceptions of where such an optimum is. On the one hand, by improving the appropriate incentives within the public administration, Rebag could cause a swing back from regulated markets. On the other hand, the introduction of elements of a reputation-based governance within the regulated (private) sector could have the opposite effect, because the wider amount of information (on the private regulated firms) automatically generated by the information system would reduce the informational asymmetry between the regulator of a market and the regulated firms, which is one of the main obstacles to effective regulation.