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Organizational Choices for Public Service Supply

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  • Ferris, James M
  • Graddy, Elizabeth

Abstract

This article investigates the nature of the service production choice of local governments. The incentives and constraints embedded in different organizational forms--public, nonprofit, and for-profit organizations--have implications for both production and transaction costs of various production options. Based on a national sample of local governments providing health services, choices among internal public production, external public production, nonprofit, and for-profit production are examined. A nested logit model is utilized to examine the impact of production and transaction costs of alternatives, the number of producers of each alternative, and the characteristics of the jurisdiction that determine the importance of production and transaction costs characteristic to the jurisdiction. The empirical results indicate that the public organization choices (internal and external) have unobserved components of utility in common, as do the private organizational choices (nonprofit and for-profit). This suggests that decisionmakers recognize the public-private distinction in their supply decisions. Copyright 1994 by Oxford University Press.

Suggested Citation

  • Ferris, James M & Graddy, Elizabeth, 1994. "Organizational Choices for Public Service Supply," Journal of Law, Economics, and Organization, Oxford University Press, vol. 10(1), pages 126-141, April.
  • Handle: RePEc:oup:jleorg:v:10:y:1994:i:1:p:126-41
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    Citations

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    Cited by:

    1. Bel Germà & Fageda Xavier & E. Mildred, 2014. "Is private production of public services cheaper than public production? A meta-regression analysis of solid waste and water services," Public administration issues, Higher School of Economics, issue 3, pages 103-140.
    2. Mildred E. Warner, 2012. "Does Local Government Size Matter? Privatization and Hybrid Systems of Local Service Delivery," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1212, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    3. Amir HEFETZ & Mildred E. WARNER, 2010. "Dynamics of service provision: service, market and place characteristics," Departmental Working Papers 2010-33, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    4. Mildred E. Warner, 2013. "Does local government size matter? Privatization and hybrid systems of local service delivery," Chapters,in: The Challenge of Local Government Size, chapter 11, pages 263-288 Edward Elgar Publishing.
    5. Germà Bel & Xavier Fageda, 2009. "Factors explaining local privatization: a meta-regression analysis," Public Choice, Springer, vol. 139(1), pages 105-119, April.
    6. Germa Bel & Xavier Fageda, 2008. "Reforming the local public sector: economics and politics in privatization of water and solid waste," Journal of Economic Policy Reform, Taylor and Francis Journals, vol. 11(1), pages 45-65.
    7. Germà Bel & Mildred E. Warner, 2016. "Factors explaining inter-municipal cooperation in service delivery: a meta-regression analysis," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 19(2), pages 91-115, June.
    8. Santiago Lago-Peñas & Jorge Martinez-Vazquez (ed.), 2013. "The Challenge of Local Government Size," Books, Edward Elgar Publishing, number 15294.
    9. Cheongsin Kim, 2015. "The Effects of Recessions on Contracting Moderated by Institutional Arrangements of Government: Evidence From California Cities, 1993–2009," Public Budgeting & Finance, Wiley Blackwell, vol. 35(2), pages 40-65, June.
    10. Germà Bel & Xavier Fageda, 2008. "Privatization and competition in the delivery of local services: An empirical examination of the dual market hypothesis," Working Papers XREAP2008-04, Xarxa de Referència en Economia Aplicada (XREAP), revised Apr 2008.

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