State enterprises were formed as a result of government disinclination to leave the infrastructure industries to arm's-length regulation of private firms. As we have seen in earlier chapters, a whole raft of non-commercial obligations were laid on them: promoting regional development and network integration, aiding working-class living standards, curbing monopoly profits, controlling strategically important resources like coal, oil and airspace. After 1945 these obligations came to be formalised under the title of the ‘public interest’. This still left many policy areas unspecified – in particular, how far should public sector prices reflect costs in different sectors, how should investment projects be evaluated? Left to their own devices, state industry managers would tend to look for a ‘business approach’. This then raises the issue of how pricing and investment policy could reflect the public interest. Such conundrums generated a whole new industry of professional economists designing price and investment policies for public-sector firms. In this chapter I first provide a brief outline of the economists' theory about state enterprise. Put crudely, it amounted to advocating cost-based tariffs, fares and rates. There was considerable resistance to widespread adoption of such policies because they conflicted violently with the policy objectives under which state enterprise had been established. I then ask how far the actual and the recommended policies were consistent with the key financial requirement laid on state enterprise, that of ensuring that revenues covered costs. Finally, we examine how the productivity record of state enterprises compares with privatised regimes.