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Soft budget constraints and the property rights theory of ownership


  • Eggleston, Karen


Modeling the government make-or-buy decision, Hart and colleagues [Hart, O., Shleifer, S. and Vishny, R.W., 1997, The proper scope of government: Theory and an application to prisons, Quarterly Journal of Economics 112, 1127-1161] assume government providers are exogenously more replaceable than private providers. Instead, we posit government managers' soft incentives arise endogenously from their lack of control rights, because of rationally softer budget constraints.

Suggested Citation

  • Eggleston, Karen, 2008. "Soft budget constraints and the property rights theory of ownership," Economics Letters, Elsevier, vol. 100(3), pages 425-427, September.
  • Handle: RePEc:eee:ecolet:v:100:y:2008:i:3:p:425-427

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    References listed on IDEAS

    1. M. Dewatripont & E. Maskin, 1995. "Credit and Efficiency in Centralized and Decentralized Economies," Review of Economic Studies, Oxford University Press, vol. 62(4), pages 541-555.
    2. Robinson, James A. & Torvik, Ragnar, 2009. "A political economy theory of the soft budget constraint," European Economic Review, Elsevier, vol. 53(7), pages 786-798, October.
    3. Oliver Hart & Andrei Shleifer & Robert W. Vishny, 1997. "The Proper Scope of Government: Theory and an Application to Prisons," The Quarterly Journal of Economics, Oxford University Press, vol. 112(4), pages 1127-1161.
    4. repec:hrv:faseco:30727607 is not listed on IDEAS
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    Cited by:

    1. Andersson, Fredrik & Jordahl, Henrik, 2011. "Outsourcing Public Services: Ownership, Competition, Quality and Contracting," Working Paper Series 874, Research Institute of Industrial Economics.
    2. Kurt R. Brekke & Luigi Siciliani & Odd Rune Straume, 2015. "Hospital Competition with Soft Budgets," Scandinavian Journal of Economics, Wiley Blackwell, vol. 117(3), pages 1019-1048, July.
    3. Kornai, János, 2008. "A puha költségvetési korlát szindrómája a kórházi szektorban
      [The soft budget constraint syndrome in the hospital sector]
      ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(12), pages 1037-1056.
    4. Eggleston, Karen & Shen, Yu-Chu, 2011. "Soft budget constraints and ownership: Empirical evidence from US hospitals," Economics Letters, Elsevier, vol. 110(1), pages 7-11, January.
    5. János Kornai, 2009. "The soft budget constraint syndrome in the hospital sector," International Journal of Health Economics and Management, Springer, vol. 9(2), pages 117-135, June.
    6. Yu-Chu Shen & Karen Eggleston, 2009. "The effect of soft budget constraints on access and quality in hospital care," International Journal of Health Economics and Management, Springer, vol. 9(2), pages 211-232, June.

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