Volltext: Very small countries: economic success against all odds

–They try to avoid or minimize diseconomies of scale by special ar- rangements of public good provision (outsourcing, free riding etc.), thus diminishing the cost disadvantage. In the outsourcing case, VSC can be examples for larger countries with regard to their pub - lic goods provision. –They do not provide or, if possible, only partially provide certain public goods. They may also provide certain public goods on infe- rior quality levels compared to other countries.68 Most likely, all three analytically distinguished possibilities may play a role in explaining the existence of VSC. In the following Chapters 4 and 5, we study the extent to which those possibilities actually apply. 68Does 
country size matter for public sector size? 68Note that the effect to which such solutions diminish citizens’ happiness is a very difficult question to answer.


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