Working Paper Series,
Research Institute of Industrial Economics

Abstract: To bolster entrepreneurship and innovation in welfare service provision, numerous countries have established quasi-markets. Yet, the actual benefits from these reforms have often been modest. We posit that quasi-markets can realize their potential only within the appropriate institutional framework, which highlights the need for studies in the field of institutional economics that identify how best to regulate quasi-markets so that they deliver in line with these expectations. While competition and the presence of for-profit actors are necessary conditions for quasi-market improvements, they alone are insufficient. We illustrate this point by showing how the three leading entrepreneurship conceptions—Knightian, Kirznerian, and Schumpeterian—risk falling short of their potential in typical quasi-market setups. Most importantly, we identify the need for a set of complementary institutions that are epistemic in nature. Such reforms should help bolster (Knightian, Kirznerian, and Schumpeterian) quasi-market entrepreneurship and help users construct the requisite knowledge to make informed choices.

Keywords: Entrepreneurship; Innovation; Marketized care; Quasi-markets; Welfare services

JEL-codes: H42; H44; H75; I22; I28; L88; O31

Language: English

22 pages, June 15, 2026

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