The evidence on government competition

Lori Taylor

Economic and Financial Policy Review, 2000, issue Q2, 2-10

Abstract: Society clearly benefits when businesses compete. The social benefits of government competition are still being debated, however. A large economics literature has sprung up to explore the premise that governments facing intense competitive pressure behave differently than do governments facing little or no competition. Lori Taylor examines the literature on government size, service quality, and productivity. She concludes that an ill-defined market for government, together with inconsistent and potentially inappropriate measuring sticks, raises the strong possibility that competition has been mismeasured in much of the literature on competition and government. Despite these flaws, the literature strongly supports one striking conclusion--competition improves public schools. Almost across the board, researchers have found that school spending is lower, academic outcomes are better, and school district efficiency is higher where parents have more choice of educational provider. Furthermore, competitive benefits appear regardless of whether the competitor is a private school or another public school.

Date: 2000
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