Optimal Scale and Efficiency of the Italian Public Utilities

This paper discusses several studies carried out at Hermes and CERIS-CNR and aims at demonstrating that in many network utilities the firms' dimension is a constraint to guarantee an efficient service with qualitative standards. The analysis concerning electricity, gas, water and local public transport industries confirm the need for increasing firm size, as a priority especially for small units. Scope economies in the electricity sector suggest the creation of vertically integrated and bigger firms able to compete with ENEL. In local public transit, the size growth can be achieved by aggregating urban and intercity activities. Local multi-utilities should move towards a more coherent productive structure, by means of merging strategies focused on "core business".