SEMAINE D'ÉTUDE SUR LE ROLE DE L’ ANALYSE ECONOMETRIOUE ETC. 
21 
that the procedures you outline relate essentially to all types of 
government investments. By that I mean those government invest- 
ments where there is essentially a monopoly, on the one hand, and 
no private individual is engaged in such activities — in most eco- 
nomies — building roads or schools. The questions that I wish to 
bring up with respect to technique relate to those cases in which 
the government output is to a degree comparable to private output — 
public or private electric power and relative to other forms of energy 
such as natural gas. 
And the two points are these: first, though it is true that in 
making its investments a private firm includes only those returns 
which it can capture, many of the kinds of returns that come from 
government investments of the external or social sort where the 
social and private return diverge, will also exist in the case of pri- 
vate investment. That is, for example, when General Motors builds 
an assembly plant, there are substantial social gains to the particular 
community involved — higher property values, various increases 
for certain other services and so on. And it seems to me that 
the procedure that you outlined tends to ignore these retums in 
the case of the private investment and where there is competition 
between the public and the private sector not really take them 
into account in comparing private and government investments 
[f this is true, there is a bias in favour of government investments. 
The second point is really along the same lines and this is the 
question, of how one again creates a real competition between the 
public and private output, whether it is direct, as in electric power 
or somewhat indirect, as between electric power and natural gas 
How are the taxes paid by the private sector included in the ana 
lysis? In some industries, such taxes may amount to a significant 
fraction of the total value of the output, and here again it seems 
to me that this is not taken into account, and you again bias the 
decisions in favour of the government’s investments 
Dorfman - pag. 25