Market mechanisms in public service provision
No 6, OECD Working Papers on Fiscal Federalism from OECD Publishing
This paper compares and analyses the use of market mechanisms in core sub-central policy areas, namely education, health care, transport, social protection, and environment. Arrangements like tendering, outsourcing, user choice and competition, user fees and performance-related funding can help to improve quality of service provision or lower its cost. With around 32% of total public expenditure and often wide-ranging spending powers, sub-central governments (SCG) have considerable leeway for improving their services by relying on market mechanisms. The decentralised and often fragmented nature of sub-central government poses some special challenges to efficient arrangements, however, and may require central government support or stronger inter-jurisdictional co-operation. And while market mechanisms are being harnessed ever more broadly, limits to a more extensive use have become apparent, particularly in the potential trade-off between greater efficiency and equity objectives, or between efficiency and sub-central accountability..
Keywords: fiscal discipline; fiscal rules; indicators; Sub-central government (search for similar items in EconPapers)
JEL-codes: C43 D78 H71 H72 H74 H81 (search for similar items in EconPapers)
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Working Paper: Market Mechanisms in Public Service Provision (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:oec:ctpaab:06-en
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