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Outsourcing Public Services: Contractibility, Cost, and Quality

Fredrik Andersson (), Henrik Jordahl () and Jens Josephson ()
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Fredrik Andersson: Lund University

No 12401, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We review the literature on public sector outsourcing to explore if the theoretical predictions from the incomplete contracts literature hold up to recent empirical evidence. Guided by theory, we arrange services according to the type and magnitude of their contractibility problems. The empirical studies point at rather favourable outsourcing outcomes, in terms of costs and quality, for services without severe contracting problems. The picture is more mixed for services with tougher contracting problems, with the weight of the evidence in favour of public provision. This difference between services is largely in line with the property-rights framework and theories of incomplete contracts.

Keywords: publicly provided goods; property rights; privatization (search for similar items in EconPapers)
JEL-codes: D23 H11 L33 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cta
Date: 2019-06
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