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Competition and Costs: Evidence from Competitive Tendering in the Scottish National Health Service

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  • Robin G. Milne
  • Robert E. Wright

Abstract

This paper estimates the impact of competitive tendering on cleaning costs in Scottish National Health Service hospitals. Unlike previous studies, which have relied on cross‐sectional data, a five‐year balanced panel of 176 hospitals is used to estimate a series of fixed effects regression models. These panel estimates suggest that previous studies have likely over‐estimated the cost‐savings associated with competitive tendering. The findings also suggest that the lower costs associated with competitive tendering have more to do with auction theory than with any intrinsic efficiency of the private sector.

Suggested Citation

  • Robin G. Milne & Robert E. Wright, 2004. "Competition and Costs: Evidence from Competitive Tendering in the Scottish National Health Service," Scottish Journal of Political Economy, Scottish Economic Society, vol. 51(1), pages 1-23, February.
    • Handle: RePEc:bla:scotjp:v:51:y:2004:i:1:p:1-23
    DOI: 10.1111/j.0036-9292.2004.05101001.x
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    References listed on IDEAS

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    11. Laffont, Jean-Jacques, 1997. "Game theory and empirical economics: The case of auction data 1," European Economic Review, Elsevier, vol. 41(1), pages 1-35, January.
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    Cited by:

    1. Luis Angeles & Robin G Milne, 2015. "Tracking cost savings from competitive tendering in the short and long run," Working Papers 2015_19, Business School - Economics, University of Glasgow.
    2. Jean Beuve & Lisa Chever, 2017. "Quality of Outsourced Services, Opportunism and Contract Design," Post-Print hal-02139517, HAL.
    3. Angeles, Luis & Milne, Robin G., 2015. "Tracking cost savings from competitive tendering in the short and long run," SIRE Discussion Papers 2015-74, Scottish Institute for Research in Economics (SIRE).
    4. Fredrik Andersson & Henrik Jordahl & Jens Josephson, 2019. "Outsourcing Public Services: Contractibility, Cost, and Quality," CESifo Economic Studies, CESifo Group, vol. 65(4), pages 349-372.
    5. Andersson, Fredrik & Jordahl, Henrik, 2011. "Outsourcing Public Services: Ownership, Competition, Quality and Contracting," Working Papers 2011:20, Lund University, Department of Economics.
    6. Luis Angeles & Robin G. Milne‌, 2015. "Tracking cost savings from competitive tendering in the short and long run," Working Papers 2015_11, Business School - Economics, University of Glasgow.
    7. Angeles, Luis & Milne, Robin G., 2015. "Tracking cost savings from competitive tendering in the short and long run," 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon TN 2015-74, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    8. Jean Beuve & Lisa Chever, 2017. "Quality of Outsourced Services, Opportunism and Contract Design," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-02139517, HAL.
    9. Alena Podaneva & Pierre Picard, 2023. "Facility Management Services in UK Hospitals: in-house or outsourcing," DEM Discussion Paper Series 23-15, Department of Economics at the University of Luxembourg.

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