Contracting Out Public Service Provision to Not-for-Profit Firms
In an incomplete contract setting, we analyze the contracting out of public service provision, comparing the performance of for-profit and notfor-profit firms (NPs). Two institutional arrangements are considered, with control rights lying either with the firm (’PPP’) or the government (’traditional procurement’). The use of an NP with traditional procurement is found never to be the preferred option in terms of social welfare. But for a range of parameter values an NP in a PPP is the preferred option. The development of PPP provision has thus created opportunities for the advantageous use of NPs in public services.
Year of publication: |
2007-04
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Authors: | Bennett, John ; Iossa, Elisabetta |
Institutions: | Centre for Economic Development and Institutions (CEDI), Brunel University |
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