ABSTRACT
The paradigm of New Public Management (NPM) in public administration 1 , influenced by public choice theory, has been pointing towards a mixed economy where the public sector would manage the relevant markets and the private sector and other stakeholders would provide public services. 2 The division of roles would bring about substantial efficiency gains and quality improvements from the use of market and quasi-market competitive mechanisms as a result of externalisation and unbundling in the delivery of public services. The state and its organs enter the market place in pursuit of public interest. 3 However, the activities of the state and its organs do not display the commercial characteristics of private entrepreneurship, as the aim of the public sector is not the maximisation of profits but the observance of public interest. 4 This fundamental difference emerges as the ground for the creation of public markets where public interest substitutes profit maximisation. 5 However, further variances distinguish private from public markets. These focus on structural elements of the market place, competitiveness, demand conditions, supply conditions, the production process, and finally pricing and risk. They also provide for an indication as to the different methods and approaches employed in their regulation. 6 The main reason for regulating public sector, the utilities and network industries is to bring their respective markets in parallel to the operation of private markets. 7 European policy makers have recognised the distinctive character of public markets and focused on establishing conditions similar to those that control the operation of private markets through a sophisticated and detailed framework of procurement regulation. 8 The public markets reflect an economic equation where the demand side is represented by the public sector at large and the utilities, whereas the supply side covers the industry.
