Volltext: Very small countries: economic success against all odds

The cost advantage of the FPUBL regime may come with disadvantages in preference adequacy and maybe in competition. The competition is- sue is less important, because in-house production should normally not be able to result in stronger competition. The degree of preference ade- quacy hinges critically on the preference heterogeneity between the country where the public good is produced and the country where it is consumed, viz. the VSC. Congestion may also play a role, but only for rival publicly provided goods, and it is difficult to imagine that usage by foreigners would be allowed in such a case. What would one expect with regard to the organizational choice for public good provision in VSC, bearing in mind the results exposed above? We will concentrate on international outsourcing, where the 87 
Very small countries and organizational choice: a normative theory Institutional or organizational forms Public GoodVSCFPUBL ESPAESPA Health care/Social security general health care++implausible hospitals++-- social 
security+++-- parks and 
recreation0+0- Infrastructure roads0++partially highways++-- railway infrastructure++-- ports and 
airports++-- Financial/Monet. system tax levy++-- revenue sharing0+implausible monetary 
system+++--- customs 
authorities0+-- ES: costs (economies of scale); PA: preference adequacy. ++ = very high; + = high; 0 = neutral; - = low; -- = very low. VSC: very small country; FPUBL: foreign public agency.


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