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Contracting for Government Services: Theory and Evidence from U.S. Cities

Jonathan Levin and Steven Tadelis

No 13350, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Local governments can provide services with their own employees or by contracting with private or public sector providers. We develop a model of this "make-or-buy" choice that highlights the trade-off between productive efficiency and the costs of contract administration. We construct a dataset of service provision choices by U.S. cities and identify a range of service and city characteristics as significant determinants of contracting decisions. Our analysis suggests an important role for economic efficiency concerns, as well as politics, in contracting for government services.

JEL-codes: D23 D73 H11 L33 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-geo, nep-pbe and nep-ure
Date: 2007-08
Note: IO PE
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Published as CONTRACTING FOR GOVERNMENT SERVICES: THEORY AND EVIDENCE FROM U.S. CITIES† JONATHAN LEVIN1, STEVEN TADELIS2 Article first published online: 3 SEP 2010 DOI: 10.1111/j.1467-6451.2010.00430.x

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