Competition in public service provision: the role of not-for-profit providers

Timothy Besley and James Malcomson

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: 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 the implications of entry by for-profit providers when there is 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)
Date: 2018-06-01
New Economics Papers: this item is included in nep-com, nep-hea and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

Published in Journal of Public Economics, 1, June, 2018, 162(S1), pp. 158-172. ISSN: 0047-2727

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http://eprints.lse.ac.uk/87517/ Open access version. (application/pdf)

Related works:
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 (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:87517

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