Competition in Public Service Provision: The Role of Not-for-profit Providers
Timothy Besley () and
James Malcomson ()
No 6759, CESifo Working Paper Series from CESifo
With public services such as health and education, it is not straightforward for consumers to assess the quality of provision. Many such services are provided by monopoly not-for-profit providers and there is concern that for-profit providers may increase profit at the expense of quality. This paper explores whether entry by for-profit providers is good for consumers despite the problem of unobserved quality. The model generates three key policy-relevant insights. First, by developing a novel approach to competition between different organizational forms, it frames the relevant trade-offs precisely. Second, it shows the value of keeping an incumbent not-for-profit as an active provider. Third, it characterizes the optimal payment (or voucher value) to an entrant for each consumer who switches in a way that can be applied empirically.
Keywords: public services; competition; not-for-profit providers (search for similar items in EconPapers)
JEL-codes: H11 H44 L21 L31 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com and nep-mic
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Journal Article: Competition in public service provision: The role of not-for-profit providers (2018)
Working Paper: Competition in public service provision: the role of not-for-profit providers (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_6759
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