Competition in Public Service Provision: The Role of Not-for-profit Providers

Arbeitspapier

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 whether entry by for-profit providers is good for consumers despite the problem of 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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 6759

Classification and Topics

• Classification: Wirtschaft ; Structure, Scope, and Performance of Government ; Publicly Provided Goods: Mixed Markets ; Business Objectives of the Firm ; Nonprofit Institutions; NGOs; Social Entrepreneurship
• Subject: public services ; competition ; not-for-profit providers

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Besley, Timothy ; Malcomson, James
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2017

Further information

• Handle: http://hdl.handle.net/10419/173035
• Last update: 10.03.2025, 11:43 AM CET