AbstractsLaw & Legal Studies

The Service Obligation of Private & State-Owned Companies

by Martin Jensen

Institution: Roskilde University
Year: 2014
Keywords: Privatization; DSB; TDC; Obligation; Public Choice; PEST; Public Value; Denmark
Record ID: 1120097
Full text PDF: http://rudar.ruc.dk/handle/1800/14807


This project seeks to investigate advantages and disadvantages of private and state-owned companies have in fulfilling their service obligation. The service obligation is conceptualized in our project as being a contract or agreement, which imposes a responsibility towards a company, with the aim of increasing public value. Therefore our project uses TDC and DSB as case studies because of the fact that both companies have a service obligation agreement with the Danish state. The central problem stems from the fact that TDC was privatized based on prerequisites created by government, which contradict the incentives that the service obligation illustrate. One could discuss that on one hand, the government privatizes a company in order to boost efficiency by eliminating political interference and letting the company develop solely in market conditions, and on the other hand creates political interference by constructing a contract such as the universal service obligation. The other central problem, lies within the fact that an EU directive from 1991 resulted in the railway system in Europe being liberalized thus allowing competition to exist in the otherwise monopolistic DSB railway system. However, even though the railway system is liberalized in Denmark, the Danish transport minister has shown a tendency towards not support the competitive market by not making additional railway routes available for competitive companies to bid on. All in all, this project investigates the advantages and disadvantages of private and state-owned companies in relation to their service obligation, and focuses on defining the underlying mechanisms within these concepts. During the process of this project, we will present our problem area where our central problem will be defined. Also in this section, our problem-formulation and working questions are presented as well. Thereafter we will display our methodological framework including our ontological and epistemological reflections based on Critical Realism being our ontological standpoint. Ultimately we will conduct a PEST analysis in order to gain an overview of the companies’ external factors, which effect the service obligation, and moreover a discussion will be conducted on the results from this. In conclusion to the project we have established a concluding and perspectivizing chapter, which presents the reader with a summary of our results in relation to our problem-formulation, and finally our reflections regarding the project are displayed.