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Public Procurement and Non-contractible Quality: Evidence from Elderly Care

Author

Listed:
  • Bergman, Mats A.

    () (Södertörns högskola Institutionen för samhällsvetenskaper)

  • Lundberg, Sofia

    () (Department of Economics, Umeå University)

  • Spagnolo, Giancarlo

    () (Stockholm School of Economics)

Abstract

Many quality dimensions are hard to contract upon and are at risk of degradation when the service is procured rather than produced in-house. On the other hand, procurement may foster performance-improving innovation. We assemble a large data set on elderly care services in Sweden for the 1990-2009 period, including survival rates, our measure of non-contractible quality, and indicators of subjectively perceived quality of service. We estimate the effects of municipalities’ decision to procure rather than produce in-house on non-contractible quality using a difference-in-difference approach and controlling for a number of other potential determinants. The results indicate that procurement significantly increases non-contractible quality as measured by survival rate, reduces the cost per resident but does not affect subjectively perceived quality.

Suggested Citation

  • Bergman, Mats A. & Lundberg, Sofia & Spagnolo, Giancarlo, 2012. "Public Procurement and Non-contractible Quality: Evidence from Elderly Care," Umeå Economic Studies 846, Umeå University, Department of Economics.
  • Handle: RePEc:hhs:umnees:0846
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    Cited by:

    1. Bergman, Mats A. & Johansson, Per & Lundberg, Sofia & Spagnolo, Giancarlo, 2016. "Privatization and quality: Evidence from elderly care in Sweden," Journal of Health Economics, Elsevier, vol. 49(C), pages 109-119.
    2. Andreas Bergh, 2014. "Sweden and the Revival of the Capitalist Welfare State," Books, Edward Elgar Publishing, number 15717.

    More about this item

    Keywords

    incomplete contracts; privatization; procurement; quality; elderly care; mortality; outsourcing; nursing home; performance measurement;

    JEL classification:

    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out

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