We make a positive analysis of the impact of market structure and political preferences on a (local) government's decision to outsource public service using the framework of Hart, Shleifer and Vishny (1997). We argue that although outsourcing is more attractive when the privte market is competitive, the outsourcing decision will be the same in a competitive as in a monopolistic market. Second, we analyze how the price paid in a private monopoly market depends on how much the government cares about the benefits of the public service, and we provide conditions for when a "leftist, public service loving" politician outsources to a lower price. When this is the case and outsourcing is a salient issue in an election, the median voter prefers a more "leftist" government to be in charge of the outsourcing.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
Publisher Info
Paper provided by University of Copenhagen. Department of Economics. Centre for Industrial Economics in its series CIE Discussion Papers with number
2003-05.
Find related papers by JEL classification: D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Boundaries of Public and Private Enterprise; Privatization; Contracting Out L97 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Utilities: General
This paper has been announced in the following NEP Reports:
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Boycko, Maxim & Shleifer, Andrei & Vishny, Robert W, 1996.
"A Theory of Privatisation,"
Economic Journal,
Royal Economic Society, vol. 106(435), pages 309-19, March.
[Downloadable!] (restricted)
Bennedsen, Morten, 1999.
"Political Ownership,"
Working Papers
11-1999, Copenhagen Business School, Department of Economics.
[Downloadable!]
Small, Kenneth A. & Gomez-Ibanez, Jose A., 1999.
"Urban transportation,"
Handbook of Regional and Urban Economics,
in: P. C. Cheshire & E. S. Mills (ed.), Handbook of Regional and Urban Economics, edition 1, volume 3, chapter 46, pages 1937-1999
Elsevier.
[Downloadable!] (restricted)
Other versions:
Small, K.A. & Gomez-Ibanez, J.A., 1996.
"Urban Transportation,"
Papers
95-96-4, California Irvine - School of Social Sciences.
Cited by: (explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)
Bennedsen, Morten & Schultz, Christian, 2003.
"Adaptive Contracting,"
Working Papers
08-2003, Copenhagen Business School, Department of Economics.
[Downloadable!]
Did you know? You can import bibliographic info in various formats into you bibliographic tool, or just into your word processor. See under "publisher info" on each abstract page.