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Private Utility's Objective: Provision of a Public Good or Profit?

Hanns-Jürgen Hodann

Public utilities do not need to make a profit. They can concentrate on providing a quality service, a public good. By contrast, the primary objective of private utilities is not to provide a public good, but profit and profitability. This simple CLD tries to show the conflict that can arise from this and a hidden dynamic, a reinforcing feedback loop, that can lead to disaster. Unfortunately, there are examples where failure in infrastructure maintenance has led to disaster. On the 9th of July 2009, the German newspaper 'Welt Online' reported that the authorities in Berlin had to intervene and force the company that was running Berlin's S-Bahn (suburban rail service) to withdraw half of all the city's trains from service because they were considered unsafe! Something similar happened in the UK where failure to maintain rail tracks led to serious accidents. 

Economics Policy Management Services Transportation

  • 3 years 10 months ago