Scandinavian Working Papers in Economics
Working Papers,
Örebro University, School of Business
No 2019:4: Outsourcing Public Services: Contractibility, Cost, and Quality
Fredrik Andersson (), Henrik Jordahl () and Jens Josephson ()
Additional contact information
Fredrik Andersson: Lund University, Postal: Lund University, Department of Economics, Box 117, SE-221 00, Lund, Sweden, Sweden
Henrik Jordahl: Örebro University School of Business, Postal: Örebro University, School of Business, SE - 701 82 ÖREBRO, Sweden
Jens Josephson: Research Institute of Industrial Economics (IFN), Postal: Research Institute of Industrial Economics (IFN), Grevgatan 34 - 2 fl, Box 55665, SE-102 15 Stockholm, Sweden
Abstract: We review the literature on public sector outsourcing to explore if the theoretical predictions from the incomplete contracts literature hold up to recent empirical evidence. Guided by theory, we arrange services according to the type and magnitude of their contractibility problems. The empirical studies point at rather favourable outsourcing outcomes, in terms of costs and quality, for services without severe contracting problems. The picture is more mixed for services with tougher contracting problems, with the weight of the evidence in favour of public provision. This difference between services is largely in line with the property-rights framework and theories of incomplete contracts.
Keywords: privatization; property rights; publicly provided goods
36 pages, May 29, 2019
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