Discussion of Professor Savas’ Paper

William Baumol

A chapter in Public and Private Enterprise in a Mixed Economy, 1980, pp 265-269 from Palgrave Macmillan

Abstract: Abstract In his opening remarks, Professor Savas said that people had many different needs such as food, water, health care, etc. There were a great variety of institutional arrangements to satisfy those needs: pure public, pure private, mixed, contracting, franchising, subsidisation of producers or consumers, licensing, etc. The question was which institution was best to satisfy what needs, in what way it was better, and why. One could speculate about these issues, and that had also been done at this conference. But one should approach these questions empirically, not dogmatically, even though the latter approach was more productive in terms of published papers. So far there had been few truly scientific comparisons of different institutions. There were three criteria for comparison: efficiency, effectiveness and equity. Efficiency meant that inputs were converted into a maximum of output, without waste. Effectiveness meant that real needs were satisfied. Equity meant fairness in distribution, without discrimination among income classes, or by race, sex, age, etc. For such a comparison he had selected solid waste disposal, which was a public good that was supplied by the government in most cities. It was a clearly defined service, which could be evaluated easily. It would be much more difficult, for example, to compare the quality of different health care services.

Keywords: Institutional Arrangement; Private Firm; Private Enterprise; Scale Economy; Garbage Collection (search for similar items in EconPapers)
Date: 1980
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DOI: 10.1007/978-1-349-16394-6_28

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