Volltext: Very small countries: economic success against all odds

cation. A country – imagine a VSC – might choose to run a public uni- versity, where the employees are paid by the government to a sufficient extent. This case would be termed 
public production and public provi- sion.The country might alternatively decide not to run its own univer- sity, but provide scholarships enabling young people to go to an adjacent country in order to attend a university there. This latter case would be an example of 
public provision.Of course, it would furthermore be pos- sible to fully subsidize a private educational institution with public funds. Although there are many possible organizational arrangements in connection with public funding, we would also call such an 
arrangement public provision,because a more precise distinction is not necessary for our purpose. The country in question might also decide not to engage in tertiary education directly and have only private, non-funded institu - tions, which is a rather unlikely case of course and would be 
called private provision.69 The benchmark case in this chapter is the case underlying traditio- nal public economic theory, where a public agency produces and pro - vides a good itself. The higher economies of scale in this provision ar- rangement, the more severe is the disadvantage of VSC. It is the aim of this chapter to compare actual provision arrangements in VSC with this benchmark case (especially for public goods with high economies of 71 
Organizational forms of public good provision: a positive approach 69Note that the given examples constitute only a few arbitrarily chosen locations on the continuous scale of publicness between entirely publicly and entirely privately provided 
Figure 4.1: Degrees of publicness Abbreviations: pub. = public; priv. = private; prod. = production; prov. = 
priv. prod & pub. prov.pub. 
support (partly financed)priv. 
prod. & prov. by firm or household pub. prod. & prov.pub. 
guarantee for prov. (fully financed)prod. 
& prov. by private organization (e.g. clubs) 
entirely private 
entirely public


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