- Political stability
- Fiscal affairs
- Monetary policy
- Regulated markets
- Privatisation
- Macroeconomic developments
Privatization for the city’s litter
submited on 06.08.2008 in category Political stability | Fiscal affairs | Monetary policy | Regulated markets | Privatisation | Macroeconomic developments
submited on 06.08.2008 in category Political stability | Fiscal affairs | Monetary policy | Regulated markets | Privatisation | Macroeconomic developments
Things are very often simpler than they appear to be. When we hear how public institutions must regulate and limit freedom, because the market is failing, it is recommendable to decide whether it really comes down to “market” or “state” failure.
In the case of collection, transportation and containing the city litter it comes down to the second.
Two mistakes dominated the public debate on the issue (especially for Sofia) – the first is that concession is equivalent to making free market, and the second is that in the case of Sofia the -concession in Sofia is real. In fact, concession is a form of public-private partnership and in this course of thoughts it increases the engagement of the private sector in a particular activity. But without making room for competition and mechanism for tying profits to results it cannot be accepted as a market mechanism. When the municipality is paying the concessionary on the basis of tons and kilometers, we could hardly say that the concessionary has incentives to be economically efficient. On the other hand, the real consumers of the service are the citizens, and they do not have any opportunity to interact with the service supplier.
The solution to the problem with collecting and containing litter is full privatization and liberalization of the activity. The essence of this step is the creation of competition, which would happen via guaranteeing open access to the market.
In the case of collection, transportation and containing the city litter it comes down to the second.
Two mistakes dominated the public debate on the issue (especially for Sofia) – the first is that concession is equivalent to making free market, and the second is that in the case of Sofia the -concession in Sofia is real. In fact, concession is a form of public-private partnership and in this course of thoughts it increases the engagement of the private sector in a particular activity. But without making room for competition and mechanism for tying profits to results it cannot be accepted as a market mechanism. When the municipality is paying the concessionary on the basis of tons and kilometers, we could hardly say that the concessionary has incentives to be economically efficient. On the other hand, the real consumers of the service are the citizens, and they do not have any opportunity to interact with the service supplier.
The solution to the problem with collecting and containing litter is full privatization and liberalization of the activity. The essence of this step is the creation of competition, which would happen via guaranteeing open access to the market.
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