Projects
June 2006 / December 2009

Municipal Capitalism - MC

Thousands of firms across Europe are in the hands of municipalities and provinces, both in traditional utility sectors and in industries which should be exposed to competition. While for years the presence of the State in the economic system and within firms in particular was... 

Thousands of firms across Europe are in the hands of municipalities and provinces, both in traditional utility sectors and in industries which should be exposed to competition. While for years the presence of the State in the economic system and within firms in particular was decreasing through the privatization process, local public firms – out of the limelight – were probably expanding their operations. Private firms complain for this supposed “invasion”, but on the other hand private shareholders are often minority partners in these enterprises. This raises at least the problem of rationalising this kind of public presence, which characterizes most European countries, but which is far from homogeneous. Moreover, the presence of different shareholders in the same firm also opens a problem, both as for the ultimate objective function of these firms, and as it calls for an explanation of the new role of the public sector in different industries.

Main Results and Outputs

In order to get a good understanding of such a complex phenomenon, the research effort has first of all concentrated on Italy, with an in-depth analysis of the budget data of about 700 firms with local public ownership, trying to document and explain the existence and the performance of these firms. The features of the Italian case highlight that local public presence can hardly be linked to political preferences, while it often goes hand in hand with the development of private firms and of social capital. Comparative studies are being developed, looking at specific sectors. A study of public transport firms in European cities has stressed how the public presence among the shareholders has a significant (negative) impact on productivity. Public presence within firms should also be understood in its relationship with competition policy, and thus the partnership with the Italian section of the Association for Competition Economics, whose annual conferences will be hosted at Feem in Milan.

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