The Dynamics of Decentralization in Italy: Towards a Federal Solution? European Diversity and Autonomy Papers, EDAP/04 2013

This paper analyses the recent process of state decentralisation in Italy from the perspectives of political science and constitutional law. It considers the conflicting pressures and partisan opportunism of the decentralising process, and how these have adversely affected the consistency and completeness of the new constitutional framework. The paper evaluates the major institutional reforms affecting state decentralisation, including the 2001 constitutional reform and the more recent legislation on fiscal federalism. It argues that while the legal framework for decentralisation remains unclear and contradictory in parts, the Constitutional Court has performed a key role in interpreting the provisions and giving life to the decentralised system, in which regional governments now perform a much more prominent role. This new system of more decentralised multi-level government must nevertheless contend with a political culture and party system that remains highly centralised, while the administrative apparatus has undergone no comparable shift to take account of state decentralisation, leading to the duplication of bureaucracy at all territorial levels and continuing conflicts over policy jurisdiction. Unlike in federal systems these conflicts cannot be resolved in Italy through mechanisms of “shared rule”, since formal inter-governmental coordination structure are weak and entirely consultative.

Mixed Public-Private Enterprises in Europe: Economic Theory and an Empirical Analysis of Italian Water Utilities. Bruges European Economic Research (BEER) Papers 4/July 2006

Mixed enterprises, which are entities jointly owned by the public and private sector, are spreading all over Europe in local utilities. Well aware that in the vast majority of cases the preference of local authorities towards such governance structure is determined by practical reasons rather than by the ambition to implement new regulatory designs (an alternative to the typical “external” regulation), our purpose is to confer some scientific value to this phenomenon which has not been sufficiently investigated in the economic literature. This paper aims at proposing an economic analysis of mixed enterprises, especially of the specific configuration in which the public partner acts as controller and the private one (or “industrial” partner) as service provider. We suggest that the public service concession to mixed enterprises could embody, under certain conditions, a noteworthy substitute to the traditional public provision and the concession to totally private enterprises, as it can push regulated operators to outperform and limit the risk of private opportunism. The starting point of the entire analysis is that ownership allows the (public) owner to gather more information about the actual management of the firm, according to property rights theory. Following this stream of research, we conclude that under certain conditions mixed enterprises could significantly reduce asymmetric information between regulators and regulated firms by implementing a sort of “internal” regulation. With more information, in effect, the public authority (as owner/controller of the regulated firm, but also as member of the regulatory agency) can stimulate the private operator to be more efficient and can monitor it more effectively with respect to the fulfilment of contractual obligations (i.e., public service obligations, quality standards, etc.). Moreover, concerning the latter function, the board of directors of the mixed enterprise can be the suitable place where public and private representatives (respectively, welfare and profit maximisers) can meet to solve all disputes arising from incomplete contracts, without recourse to third parties. Finally, taking into account that a disproportionate public intervention in the “private” administration (or an ineffective protection of the general interest) would imply too many drawbacks, we draw some policy implications that make an equitable debate on the board of the firm feasible. Some empirical evidence is taken from the Italian water sector.