The privatization of social services is being increasingly discussed. The social services market is characterized by multiple market failures, including informational asymmetries, agency problems, externalities, and distributional concerns. Consumers may care as much or more about quality of services than about price. If quality is readily observable, the government can regulate private providers to assure standards are met. But when standards are difficult to observe or when the recipient is not the agent who makes the decisions, government ownership may be preferable. This paper categorizes the market situations in which the government provision of social services is likely to be most versus least attractive.
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number
7099.
Length: Date of creation: Apr 1999 Date of revision: Handle: RePEc:nbr:nberwo:7099
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Find related papers by JEL classification: H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government I00 - Health, Education, and Welfare - - General - - - General
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