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Organizational Choices for Public Service Supply

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  • Ferris, James M
  • Graddy, Elizabeth
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    Abstract

    This article investigates the nature of the service production choice of local governments. The incentives and constraints embedded in different organizational forms--public, nonprofit, and for-profit organizations--have implications for both production and transaction costs of various production options. Based on a national sample of local governments providing health services, choices among internal public production, external public production, nonprofit, and for-profit production are examined. A nested logit model is utilized to examine the impact of production and transaction costs of alternatives, the number of producers of each alternative, and the characteristics of the jurisdiction that determine the importance of production and transaction costs characteristic to the jurisdiction. The empirical results indicate that the public organization choices (internal and external) have unobserved components of utility in common, as do the private organizational choices (nonprofit and for-profit). This suggests that decisionmakers recognize the public-private distinction in their supply decisions. Copyright 1994 by Oxford University Press.

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    Bibliographic Info

    Article provided by Oxford University Press in its journal Journal of Law, Economics and Organization.

    Volume (Year): 10 (1994)
    Issue (Month): 1 (April)
    Pages: 126-41

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    Handle: RePEc:oup:jleorg:v:10:y:1994:i:1:p:126-41

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    Cited by:
    1. Germa Bel & Xavier Fageda, 2008. "Reforming the local public sector: economics and politics in privatization of water and solid waste," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 11(1), pages 45-65.
    2. Germà Bel & Xavier Fageda, 2009. "Factors explaining local privatization: a meta-regression analysis," Public Choice, Springer, vol. 139(1), pages 105-119, April.
    3. Germà Bel & Xavier Fageda & Mildred E. Warner, 2009. "Is Private Production of Public Services Cheaper than Public Production? A meta-regression analysis of solid waste and water services," IREA Working Papers 200923, University of Barcelona, Research Institute of Applied Economics, revised Oct 2009.
    4. Germà Bel & Xavier Fageda, 2008. "Privatization and competition in the delivery of local services: An empirical examination of the dual market hypothesis," Working Papers XREAP2008-04, Xarxa de Referència en Economia Aplicada (XREAP), revised Apr 2008.
    5. Mildred E. Warner, 2012. "Does Local Government Size Matter? Privatization and Hybrid Systems of Local Service Delivery," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1212, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.

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