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Economic Analysis of Law in European Legal Scholarship 11

Klaus Mathis
Avishalom Tor Editors

Law and
Economics
of Regulation
Economic Analysis of Law in European
Legal Scholarship

Volume 11

Series Editor
Klaus Mathis, Faculty of Law, University of Lucerne, Lucerne, Switzerland

Editorial Board Members

Pierluigi Chiassoni, University of Genova, Genova, Italy
Péter Cserne, University of Hull, Hull, UK
Bruno Deffains, University of Paris II - Sorbonne Universities, Paris, France
Thomas Eger, University of Hamburg, Hamburg, Germany
Mariusz J. Golecki, University of Łódž, Łódž, Poland
Andreas Heinemann, University of Zurich, Zurich, Switzerland
Régis Lanneau, University of Paris Nanterre and Sciences Po Paris, Paris, France
Aurélien Portuese, De Montfort University Leicester, Leicester, UK
Kai Purnhagen, University of Wageningen and Erasmus University Rotterdam,
Wageningen, The Netherlands
Lucia A. Reisch, Copenhagen Business School, Copenhagen, Denmark
Anne-Lise Sibony, University of Louvain, Louvain-la-Neuve, Belgium
Endre Stavang, University of Oslo, Oslo, Norway
The purpose of this book series is to publish high quality volumes in the growing
field of law and economics research in Europe, from a comprehensive theoretical and
practical vantage point. In particular, the series will place great emphasis on foun-
dational and theoretical aspects of economic analysis of law and on interdisciplinary
approaches in European Legal Scholarship. Following Nobel laureate Ronald
Coase’s famous essay “The Problem of Social Cost” (1960) fifty years ago law
and economics has become the lingua franca of American jurisprudence. In recent
decades, law and economics has also gained widespread popularity in Europe and its
influence on Legal Scholarship is growing significantly.
Therefore, the economic analysis of law in European Legal Scholarship academic
book series illustrates how law and economics is developing in Europe and what
opportunities and problems – both in general and in specific legal fields – are
associated with this approach within the legal traditions of European countries.
Rather than further exploring economic analysis as such, the main focus of this
series lies on the implementation of economic methods in legislation and legal
adjudication from a European perspective. It takes into account the particular
challenges the European legal systems face. Volumes will address law and econom-
ics research in Europe from a critical and comparative viewpoint. The studies in this
series are strong and bold narratives of the development of economic analysis of law
in European Legal Scholarship. Some are suitable for a very broad readership.
Contributions in this series primarily come from scholars in Europe. The purpose
is to provide the next generation of European lawyers with the models and skills
needed to understand and improve the economic analysis of law in their own legal
field. The series includes monographs focusing on specific topics as well as collec-
tions of essays covering specific themes.

More information about this series at http://www.springer.com/series/11927

Klaus Mathis • Avishalom Tor
Editors

Law and Economics of

Regulation
Editors
Klaus Mathis Avishalom Tor
Faculty of Law School of Law
University of Lucerne University of Notre Dame
Lucerne, Switzerland Notre Dame, IN, USA

Economic Analysis of Law in European Legal Scholarship

ISBN 978-3-030-70529-9 ISBN 978-3-030-70530-5 (eBook)
https://doi.org/10.1007/978-3-030-70530-5

© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland
AG 2021
This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether
the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of
illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and
transmission or information storage and retrieval, electronic adaptation, computer software, or by
similar or dissimilar methodology now known or hereafter developed.
The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication
does not imply, even in the absence of a specific statement, that such names are exempt from the relevant
protective laws and regulations and therefore free for general use.
The publisher, the authors, and the editors are safe to assume that the advice and information in this
book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or
the editors give a warranty, expressed or implied, with respect to the material contained herein or for any
errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional
claims in published maps and institutional affiliations.

This Springer imprint is published by the registered company Springer Nature Switzerland AG.
The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland
Preface

This edited volume “Law and Economics of Regulation” is a collection of papers

which were due to be presented at the 9th Law and Economics Conference in
Lucerne on the 27th and 28th of March 2020, co-organised by the University of
Lucerne, Institute for Economy and Regulation, and the Notre Dame Research
Program on Law and Market Behavior (ND LAMB). Unfortunately, due to the
global COVID-19 pandemic, the conference could not take place. Irrespective of
these unfortunate circumstances, the editors and authors have created an edited
volume on the current issues associated with economic analysis of regulation.
The main focus of this volume is on presenting European legal scholars’ per-
spectives on the issues surrounding the Law and Economics of Regulation. These are
complemented by insights from distinguished scholars from the USA, Israel, and
New Zealand in order to foster the international dialogue among the different legal
cultures. The thematic scope of this volume spans both the theoretical foundations
and specific practical applications of the Law and Economics of Regulation.
We take this opportunity to thank all those who have contributed to the successful
completion of this volume. Therefore, we would like to thank Lynn Gummow,
MLaw, Lyanne Elsener, BLaw, Roger Moser, BLaw, Marc Schillig, BLaw, and
Philipp Gisler for their reviewing and diligent proofreading. We are also grateful to
Manuela Schwietzer at Springer Publishers for overseeing the publishing process.

Lucerne, Switzerland Klaus Mathis

Notre Dame, IN, USA Avishalom Tor
December 2020

v
About This Book

Regulation today has grown into one of the main determinants of the modern
economy. Nearly every sector—financial service providers, pharmaceutical compa-
nies, automotive manufacturers, food and beverage producers, travel agencies, social
media platforms, and more—is subject to specific rules and standards in addition to
general laws and regulations applicable across industries. The typical rationale for
regulatory intervention is the promotion of the public interest. Fixing markets that
lack competition, balancing information asymmetries, internalising externalities,
mitigating systemic risk, or protecting consumers from irrational behaviour are
frequently invoked both to substitute for and to complement the invisible hand of
the market with the visible hand of the state.
Traditionally, law and economics literature has taken a mostly sceptical stance
towards state interference and its justifications, from both normative and positive
perspectives. In the late 1960s, Harold Demsetz criticised what he called the Nirvana
approach to economics, i.e. the attempt to impose regulation whenever a difference
between reality and a theoretical optimum is identified. Instead, he advocated a
comparative institutional approach, according to which the institutional setting
should only be amended if doing so actually yields preferable results. However,
because regulation often yields unintended consequences, one should be hesitant to
view regulation as the panacea that could turn an imperfect world into paradise. Not
long thereafter, a second strand of economic thought championed by Stigler and
others called into question the public interest rationale as the main driver of regula-
tory growth, suggesting instead that much regulation, in fact, serves the private
interest of powerful interest groups rather than advancing social welfare.
Since the early contributions of Demsetz and Stigler, the debate over the law and
economics of regulation has raised many questions whose implications span a
variety of legal fields and almost every major economic sector: To what extent do
different regulatory goals such as data privacy, environmental protection, or safety
require different regulatory strategies? Which regulatory instruments should be
implemented under different market conditions? What drives public agencies
when they enact and enforce regulation? Is sectorial self-regulation a viable and

vii
viii About This Book

legitimate alternative to regulation through government agencies? Which sanctions

are most effective? This volume aims to explore theoretically and empirically these
and related timely issues in the regulation of various economic sectors, from both the
neoclassical and the behavioural economics approaches to regulation.
Part I of this volume, “Law and Economics of Regulation Theory”, begins with
the chapter “Public Services as a Strategy of Regulation” by Régis Lanneau. He
analyses whether public services should be considered as a regulatory strategy
instead of a service provided by the state. In doing so, he argues that public services
and regulation cannot be regarded as two separate state interventions. The regulatory
strategy employed reflects a command and control element coupled with some form
of compensation. Subsequently, the author discusses the practical implications that
such a reframing of public services would mean. Firstly, with regard to efficiency
implications. Secondly, regarding the reach public services would have - if consid-
ered as a regulatory strategy.
The next chapter “Sectoral Self-Regulation as Viable Tool” by Rolf H. Weber
analyses the strengths and weaknesses of self-regulation. Using distributed ledger
technology as an example, he argues that a co-regulation approach relying on self-
regulation together with a normative framework would provide the most efficient
regulatory approach in technological fields. This is in part due to the flexibility such
an approach offers to the fast-changing environment. What’s more, he argues that
the efficient involvement of all private and public actors affected by the rules is best
invested in developing the regulatory framework while at the same time promoting
innovation and competition in the given technological environment.
Yuval Feldman and Yotam Kaplan identify and discuss the existence of “ethical
blind spots” in their chapter “Ethical Blind Spots & Regulatory Traps: On Distorted
Regulatory Incentives, Behavioral Ethics & Legal Design”. These are areas where,
normally, law-abiding people fail to recognise their illegal and unethical conduct.
While regulators should act to increase the ethical awareness to encourage compli-
ance, they often have a greater incentive to protect the blind spots. The authors
analyse this problem by looking to behavioural economics in order to identify why
these blind spots exist and why regulators may not remedy this situation.
In “Law and Economics in Russian Law”, Mikhail Antonov discusses the
development of the Law and Economics movement in Russia. He begins his chapter
by outlining the historical context of the Russian legal system and discussing the
influences that Soviet Law had on the development of Russian Law, in particular the
attitude towards the economic analysis of law. The early developments of post-
Soviet law saw a rejection of economic analysis of law due to its association with
Marxist based teachings. This distrust was further compounded by the actions of
corrupt officials, who overruled the statutory law by using economic arguments as
justification. With the introduction of the “Oligarch Policy” by Vladimir Putin in his
first presidency, economic rhetoric was banned from courts and with it the economic
analysis of law. Despite more recent interest among Russian Legal Scholars in the
economic analysis of law, the use of it in courts is still treated with suspicion due to
the historical connection to corruption.
About This Book ix

Part II of this volume “Specific Applications of Law and Economics of Regula-

tion” begins with Shmuel I. Becher’s chapter “Key Lessons for the Design of
Consumer Protection Legislation” that discusses the limitations of the legislative
process. Starting from the standpoint that legislation can often fail to provide the
desired result and sometimes achieve unintended consequences, he describes the key
weaknesses of the legislative process. Using consumer law as an example, the
unintended harms the consumers encounter are described. However, the author
also identifies four principles, which he argues should improve the legislative
process and prevent such failures. These four principles are: a more gradual and
cautious approach, a multidisciplinary, evidence-based approach, a more humble
decision-making process approach relying on temporary protection laws as opposed
to more permanent legislation, and finally, he argues for a diffuse legislative
approach delegating legislative and policy responsibility to administrative agencies
or consumer organisations. The author draws on examples of different approaches to
consumer law found in Europe, North America, Australia, New Zealand, and Israel.
“Regulation of Information About Unfolding Events in Securities Markets: A
Behavioral Economics Perspective” by Ido Baum, Jaroslaw Beldowski, and Dov
Solomon compares and contrasts the security market regulations in Europe and the
USA. In particular, they focus on the regulations surrounding disclosures and
analyse these from a behavioural economics perspective. The particular challenge
posed is the disclosure of material unfolding events. The most significant differences
between the two legal approaches rely on the definition of what information is
considered to be material, and whether or not the disclosure of such information is
mandatory or voluntary. The authors argue that cognitive biases, such as
overconfidence, overoptimism, among others, influence the disclosure side, while
conservatism, availability bias, or the ostrich effect influence the investor side.
Against this background, the different legislative approaches pursued by the USA
and Europe lead the authors to conclude that the disclosure architecture of both
systems ought to pursue a more nuanced approach to take biases into account.
Mira Burri examines the data protection regulation in the context of global trade
law in her chapter “Data Flows Versus Data Protection: Mapping Existing Reconcil-
iation Models in Global Trade Law”. The chapter begins by outlining various legal
frameworks regarding data protection, as well as comparing and contrasting the EU
regulation with the regulation in the USA. Subsequently, the author turns to the data
protection rules that have emerged through free trade agreements as a result of the
lacking regulatory framework from the World Trade Organisation. This analysis
shows the tension between free data flows, which are considered essential in today’s
data-driven economy, and the states’ duty and sovereign right to protect its citizens’
privacy.
“The Concept of Regulatory Arbitrage” by Thomas Coendet discusses the prac-
tice of economic agents structuring their activities in such a manner as to optimise
their gain by utilising the more favourable regulatory framework. In particular, the
author discusses this practice within the finance background. The chapter provides a
conceptual framework for the practice of regulatory arbitrage. He describes three of
the most common regulatory arbitrage situations: choosing between different
x About This Book

jurisdictions; choosing between different sets of regulation, and actively avoiding

certain regulation. However, he argues that these are not simply cost–benefit analysis
or regulatory avoidance decisions. Instead, the more complex economic and socio-
logical background illuminated in this chapter shows that financial arbitrage is a
more realistic concept than previously described.
Moran Ofir and Yevgeny Mugerman analyse the impacts that macroprudential
tools have on the decision-makers in the mortgage market. Their chapter “(Un)-
intended Consequences of Macroprudential Regulation” describes the changes in the
housing market in Israel. The unprecedented increase of house prices and rent costs
has resulted in various regulatory approaches to impose restrictions to ensure the
stability of the financial system and avoid a housing market crash akin to the global
financial crisis in 2008. They begin with a theoretical behavioural analysis of the
mortgage decision-making process. Against this background, the authors then ana-
lyse the empirical data provided by the Israel Central Bank to understand how the
macroprudential policy tools influence the mortgage market. In particular, they
follow the borrowers’ responses to the Loan-to-Value Limits, changes in the
required capital adequacy of the banks, and the different provisions regarding
payment-to-income, among others. They conclude that the regulatory provisions
showed to have a lesser impact on the borrowers’ decision than expected by the
regulator.
In his chapter “Precautionary Antitrust: A Precautionary Tale in European Com-
petition Policy”, Aurelien Portuese argues that the new approach advocated by the
European Commission for competition enforcement towards digital markets is an
application of the precautionary principle. The Commission’s approach, he argues, is
neither a policy error nor a legal flaw—it is a regulatory preference for precaution
over innovation and disruption. To substantiate this claim, the author begins by
describing the precautionary principle and subsequently turns to a definition of
precautionary antitrust. Against this background, he devises an explanatory frame-
work as a guiding principle in the foreseeable trends in European and American
antitrust enforcements.
The chapter “Regulation and Deregulation of Financial Markets from the Per-
spective of Law and Economics” by Mariusz J. Golecki discusses the traditional
models used to regulate the financial market, namely: the transaction-oriented,
institution-oriented, and market-oriented model. To best understand why the
market-oriented model has become the more prevalent, the author illuminates the
evolution of the law, particularly focusing on the changes in the USA and comparing
that to the recent regulatory shifts in Europe. He concludes that the financial crisis
proved that good regulation is essential in the financial market. Furthermore, good
regulation requires a sound normative theory of both the derivatives and investors’
behaviour. Subsequently, the role of judicial governance in this field is discussed,
concluding that it does play a significant role as an alternative to market and political
processes.
Ann-Sophie Vandenberghe discusses the impacts of the regulatory change
regarding income security for disabled workers in the Netherlands. Her chapter
“Privatizing Income Security for Disabled Workers: Unintended Consequences
About This Book xi

and Labour Market Imbalances” provides an in-depth analysis of the Dutch Gov-
ernment’s move to privatise income security for disabled workers. She begins by
outlining the challenges presented by the overuse of public schemes and the lack of
support for reintegration into the workforce. Subsequently, the current regulations
forcing private employers to continue to pay wages for sick employees for up to
2 years and the impact this regulation has had on the employment market are
analysed. She concludes by making a clear case that while this regulatory change
has achieved some improvements for employees, other aspects within the employ-
ment market have suffered from unintentional negative consequences.
The chapter “Regulating Innovation” by Markus Schreiber analyses the interplay
of law and economics on innovation regulation. While innovation is one of the main
drivers of economic growth, some of the regulatory attempts to encourage innova-
tion have unintended consequences. A central question in this context is whether
governments have a legitimate reason to interfere in the market by means of
regulation, and if so, what is the economic rationale behind such regulation? The
author elucidates and analyses in which instances governments have legitimate
reasons to interfere in the market economy in order to promote innovation. In
doing so, the impacts regulations have on innovation are examined before discussing
the problems and economic consequences of legislators’ attempts to promote inno-
vation. The author concludes with a guideline for “best practices” for the furtherance
of innovation through regulatory means.
The final chapter by James W. Coleman, “Matching Commitments: A New
Approach to Regulation of the Commons” delves into the pitfalls faced by regulators
with regard to protecting the climate while encouraging innovation. Climate change
is a global problem that requires all countries to adopt a globally optimal level of
climate regulation. A mere domestic approach will not achieve the required reduc-
tion in greenhouse gases nor provide sufficient incentives for other countries to
tackle their emissions. To resolve this issue, the author proposes that the countries
adopt a new strategy: climate matching commitments. Rather than relying on
international treaties, prescribing unilateral reductions in greenhouse gas emissions,
or cajoling other countries into taking the necessary measures, the author suggests
climate regulations should automatically increase their response to regulations of
other countries. So, instead of one country planning to cut its emissions by 40% by
means of their domestic regulation, the regulator would commit to a lower emission
with a promise to add to that specified reduction the same amount of reduction
regulated by another key economy. This, the author argues, would encourage other
countries to adopt more stringent regulations, as this would have a knock-on effect
on others. This knock-on effect would ultimately benefit all. Such an approach
would be more successful than continuing with the current international negotiation
strategy, as each country is free to decide unilaterally what their baseline reduction
would be.
Contents

Part I Law and Economics of Regulation Theory

Public Services as a Strategy of Regulation . . . . . . . . . . . . . . . . . . . . . . . 3
Régis Lanneau
Sectoral Self-Regulation as Viable Tool . . . . . . . . . . . . . . . . . . . . . . . . . 25
Rolf H. Weber
Ethical Blind Spots & Regulatory Traps: On Distorted Regulatory
Incentives, Behavioral Ethics & Legal Design . . . . . . . . . . . . . . . . . . . . . 37
Yuval Feldman and Yotam Kaplan
Law and Economics in Russian Law . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Mikhail Antonov

Part II Specific Applications of Law and Economics of Regulation

Key Lessons for the Design of Consumer Protection Legislation . . . . . . . 73
Shmuel I. Becher
Regulation of Information About Unfolding Events in Securities
Markets: A Behavioral Economics Perspective . . . . . . . . . . . . . . . . . . . . 101
Ido Baum, Jaroslaw Beldowski, and Dov Solomon
Data Flows versus Data Protection: Mapping Existing Reconciliation
Models in Global Trade Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129
Mira Burri
The Concept of Regulatory Arbitrage . . . . . . . . . . . . . . . . . . . . . . . . . . . 159
Thomas Coendet
(Un)intended Consequences of Macroprudential Regulation . . . . . . . . . . 183
Moran Ofir and Yevgeny Mugerman

xiii
xiv Contents

Precautionary Antitrust: A Precautionary Tale in European

Competition Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 203
Aurelien Portuese
Regulation and Deregulation of Financial Markets from the
Perspective of Law and Economics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 233
Mariusz J. Golecki
Privatizing Income Security for Disabled Workers: Unintended
Consequences and Labour Market Imbalances . . . . . . . . . . . . . . . . . . . 257
Ann-Sophie Vandenberghe
Regulating Innovation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 273
Markus Schreiber
Matching Commitments: A New Approach to Regulation
of the Commons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 307
James W. Coleman

Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 317
Contributors

Mikhail Antonov Higher School of Economics, Saint Petersburg, Russia

Ido Baum Faculty of Law, Haim Striks School of Law, Tel Aviv, Israel
Shmuel I. Becher Faculty of Law, University of Wellington, Wellington,
New Zealand
Jaroslaw Beldowski Economic Analysis College, International Comparative Stud-
ies Department, Warsaw School of Economics, Warsaw, Poland
Mira Burri Faculty of Law, University of Lucerne, Lucerne, Switzerland
Thomas Coendet KoGuan School of Law, Shanghai Jiao Tong University, Shang-
hai, China
James W. Coleman Southern Methodist University Dedman School of Law,
Dallas, TX, USA
Yuval Feldman Bar-Ilan Law Faculty, Bar Ilan University, Ramat Gan, Israel
Mariusz J. Golecki University of Lodz, Łódź, Poland
Yotam Kaplan Bar-Ilan Law Faculty. Bar Ilan University, Ramat Gan, Israel
Régis Lanneau University of Paris Nanterre, Paris, France
Yevgeny Mugerman Bar-Ilan University, Ramat Gan, Israel
Moran Ofir Interdisciplinary Center (IDC) Herzliya, Herzliya, Israel
Aurelien Portuese Brussels School of Governance, Vrije Universiteit Brussels,
Brussels, Belgium
Markus Schreiber Faculty of Law, University of Lucerne, Lucerne, Switzerland
Dov Solomon Commercial Law Department, College of Law and Business, Ramat
Gan Law School, Ramat Gan, Israel

xv
xvi Contributors

Ann-Sophie Vandenberghe Rotterdam Institute of Law and Economics (RILE),

Erasmus School of Law, Rotterdam, The Netherlands
Rolf H. Weber Faculty of Law, University of Zurich, Zurich, Switzerland
 Part I
Law and Economics of Regulation Theory
Public Services as a Strategy of Regulation

Régis Lanneau

Abstract When legal regulations are considered, it is very unusual to analyze public
services as a regulatory strategy. They are certainly a way for the “state” to intervene
in the economy but most efforts by academics, lawyers and policy makers focus on
the way to regulate them—from the condition of their creation to their reach and
impact on competition—using orthodox (e.g. command and control or economic
incentives) or heterodox (e.g. mandated disclosure or nudges) regulatory strategies.
Under this traditional conceptualization, public services should be defined by the
nature of the service they are providing, the nature having then an influence on the
regulation of that service. The purpose of this paper is to reverse our perspective of
public services regarding their relation vis-à-vis regulation. Public services are not
mere services which need to be regulated keeping an eye on the influence of that
regulation on distortion of competition, they are, essentially, a type of regulation.
Not only is this approach more coherent with the use of this notion by European
institutions and its practical legal relevance, it also forces us to reconsider the
relevance of public services (as a type of regulation) compared to other regulatory
strategies. As any other regulatory strategy, it should be used if and only if it is the
efficient way to achieve what the regulation is aiming for. Such a conceptualization
thus contributes to a limiting of blind spots when the efficiency of a public service
(considered as a service) is considered.

1 Introduction

One of the main features of the modern welfare state is the provision of public
services. From utilities (electricity, telecommunication, transportation, etc.)
to healthcare, education and pension systems, from internal and external security
to the development of a legal system, public services—used as a generic label to

R. Lanneau (*)
University of Paris Nanterre, Paris, France
e-mail: [email protected]

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 3

K. Mathis, A. Tor (eds.), Law and Economics of Regulation, Economic Analysis of
Law in European Legal Scholarship 11,
https://doi.org/10.1007/978-3-030-70530-5_1
4 R. Lanneau

include services of general interest, service of general economic interest, services of

general social interest, etc.—are everywhere. It is of course possible to criticize their
reach, their quality or their costs, to consider that these, or part of these public
services should, or should not, be delegated to private entities, or to advocate for
some modification in their legal regime. But it is impossible to criticize the fact that
one of the main functions of the state is to provide, directly or indirectly, public
services.1
Such statement is even easier to make since it is, if not meaningless, largely
empty. Indeed, when considered more carefully, it appears that no accepted and
workable definition of public services2 exists or of what makes the “publicness” of
public services3. . . so that it would be possible to equate state intervention with
public service—especially if redistribution is considered as a public service—mak-
ing the statement a mere tautology.
It could be possible, at this stage, to clarify the concept a little more so that it
would be more workable, to engage into a critical analysis of all the different
definitions of public services (and related concepts) which could be found in the
literature,4 positive law or political statements. Such an analysis would certainly be
enlightening. Indeed stressing that the “French” concept(s) of public services rests
on the idea that the state pursues a superior end such that public services are
inherently different from private services5 is crucial to understand the regulation of
public services in France or the difficulties that French academics have when dealing
with European concepts of services of general interest, services of general economic
interest or universal service obligations6 since the “aura” which goes with the
“public service” disappears. It would be equally relevant to stress that the idea of
public service in the British or American tradition is largely replaced by the concept
of “public interest”, probably more economic in its nature since it is linked to the
idea of public welfare.7 But to identify and analyze a sufficient number of legal
traditions while avoiding caricature is beyond the scope of this paper and largely
irrelevant to the point it tries to make.
For the purpose of this paper, it suffices to state that the concept, is often defined
through the nature of the services and, as such, it is legally open-ended: the definition
of public services (or public interest) is too fuzzy to allow for a strict demarcation
between what is and what is not a public service (positive definition) or what should
or should not be a public service (normative definition). For example, the Commis-
sion’s definition of service of general interest as service “that public authorities of the

1
For example, see Mueller (2003) and Buchanan (1965).
2
For example, see Sauter (2015), p. 10.
3
Pesch (2008).
4
For example, Prosser (2005).
5
Finger and Finon (2011).
6
Tourbe (2004).
7
For example, Finger and Finon (2011).
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