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The determinants of public versus private provision of Emergency Medical Services

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  • David, Guy
  • Chiang, Arthur J.

Abstract

Competition for the provision of local public services often involves mixing private firms and public agencies. Predicting competitive outcomes therefore requires identifying the productive and strategic advantages of different organizational configurations: pure public, pure private or a public-private mix. We consider a make-versus-buy decision in a government procurement context by identifying the strength of public agencies as having an inherent advantage in accessing local infrastructure while private firms are identified as having a superior incentive to exploit returns to scale technologies due to their ability to service multiple localities. We focus on the choice of system configuration for the provision of Emergency Medical Services (EMS), a socially important service which benefits from infrastructural synergies as well as technological improvements (i.e. medical quality). We test our predictions on a panel data set of the 200 largest US cities and find that smaller cities and poorer access to hospitals favor the mixed public-private configuration in the provision of EMS.

Suggested Citation

  • David, Guy & Chiang, Arthur J., 2009. "The determinants of public versus private provision of Emergency Medical Services," International Journal of Industrial Organization, Elsevier, vol. 27(2), pages 312-319, March.
    • Handle: RePEc:eee:indorg:v:27:y:2009:i:2:p:312-319
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    References listed on IDEAS

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    1. Jonathan Levin & Steven Tadelis, 2010. "Contracting For Government Services: Theory And Evidence From U.S. Cities," Journal of Industrial Economics, Wiley Blackwell, vol. 58(3), pages 507-541, September.
    2. Oliver Hart & Andrei Shleifer & Robert W. Vishny, 1997. "The Proper Scope of Government: Theory and an Application to Prisons," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(4), pages 1127-1161.
    3. Trevor L. Brown & Matthew Potoski, 2003. "Managing contract performance: A transaction costs approach," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 22(2), pages 275-297.
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    Cited by:

    1. Dalton, Christina Marsh & Warren, Patrick L., 2016. "Cost versus control: Understanding ownership through outsourcing in hospitals," Journal of Health Economics, Elsevier, vol. 48(C), pages 1-15.
    2. Osvaldo Candido & Wilfredo L. Maldonado & Cintia L. M. Araujo, 2021. "Private or Public Enterprises? Cost Inefficiency Limits - An Application to Water Supply Companies in Brazil," Working Papers, Department of Economics 2021_09, University of São Paulo (FEA-USP).
    3. Guy David & Tanguy Brachet, 2011. "On the Determinants of Organizational Forgetting," American Economic Journal: Microeconomics, American Economic Association, vol. 3(3), pages 100-123, August.
    4. Elizabeth Ty Wilde, 2013. "Do Emergency Medical System Response Times Matter For Health Outcomes?," Health Economics, John Wiley & Sons, Ltd., vol. 22(7), pages 790-806, July.

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