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Competition and Efficiency in Publicly Funded Services


  • Jens Lundsgaard


This paper reviews the extent to which OECD countries have opened the provision of publicly funded services to competition among public and private suppliers. The paper lays out an analytical framework identifying the inherent incentive and efficiency issues associated with the provision of publicly funded services and outlines how they may be addressed via performance-related funding, benchmarking, contracting-out by public agencies and voucher schemes which allow users to choose among suppliers while maintaining public funding. Also, the empirical literature on contracting-out of technical and support services and on school choice is reviewed. In compulsory education, the provision mode is relatively uniform across OECD countries with most students by far attending public schools. However, the involvement of private institutions increase with education level and orientation towards occupational skills, and in many countries funding arrangements for public institutions are being ... Concurrence et efficacité dans les services financés par le secteur public Cette étude examine dans quelle mesure les pays de l'OCDE ont ouvert l'offre de services financés par l’Etat à la concurrence entre fournisseurs publics et privés. Elle définit un cadre analytique pour identifier les problèmes intrinsèques d'incitation et d'efficience associés à la prestation de services financés par l’Etat et montre brièvement comment ceux-ci peuvent être résolus avec un financement lié aux résultats, des analyses comparatives, des contrats de sous-traitance par les organismes publics et des programmes de coupons, de façon à permettre aux usagers de choisir entre plusieurs fournisseurs tout en maintenant les financements publics. Par ailleurs, le document passe en revue les études empiriques sur la sous-traitance des services techniques et de soutien et sur le choix de l'établissement scolaire. Au stade de la scolarité obligatoire, le mode de prestation est relativement uniforme dans l'ensemble des pays de l'OCDE, la très grande majorité des élèves fréquentant l’école ...

Suggested Citation

  • Jens Lundsgaard, 2002. "Competition and Efficiency in Publicly Funded Services," OECD Economics Department Working Papers 331, OECD Publishing.
  • Handle: RePEc:oec:ecoaaa:331-en
    DOI: 10.1787/282126010667

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    Cited by:

    1. Luc Behaghel & Bruno Cr?pon & Marc Gurgand, 2014. "Private and Public Provision of Counseling to Job Seekers: Evidence from a Large Controlled Experiment," American Economic Journal: Applied Economics, American Economic Association, vol. 6(4), pages 142-174, October.
    2. Ochel, Wolfgang, 2007. "Contracting out Employment Services Involving Temporary Agency Work in Germany," MPRA Paper 13820, University Library of Munich, Germany.
    3. Pearson, Mark & Martin, John P., 2005. "Should We Extend the Role of Private Social Expenditure?," IZA Discussion Papers 1544, Institute of Labor Economics (IZA).
    4. Plaček Michal & Ochrana František & Schmidt Martin & Půček Milan, 2016. "The Evaluation of the Role of the Office for Protection of Competition of the Czech Republic in Regulating Public Procurement," NISPAcee Journal of Public Administration and Policy, Sciendo, vol. 9(1), pages 97-116, June.
    5. repec:ces:ifodic:v:2:y:2004:i:2:p:14567805 is not listed on IDEAS
    6. Elke J. Jahn & Wolfgang Ochel, 2005. "Contracting Out Temporary Help Services in Germany," CESifo Working Paper Series 1580, CESifo.
    7. Wolfgang Ochel, 2004. "Competitive Tendering and Contracting of Temporary Work Agencies in Germany," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 2(2), pages 69-74, 07.
    8. Herwig Immervoll & David Barber, 2005. "Can Parents Afford to Work?: Childcare Costs, Tax-Benefit Policies and Work Incentives," OECD Social, Employment and Migration Working Papers 31, OECD Publishing.
    9. Valila, Timo, 2005. "How expensive are cost savings? On the economics of public-private partnerships," EIB Papers 4/2005, European Investment Bank, Economics Department.
    10. Marius Constantin PROFIROIU & Septimiu Rares SZABO, 2016. "Outsourcing vs decentralisation: A comparative analysis in Central and Eastern Europe," Eco-Economics Review, Ecological University of Bucharest, Economics Faculty and Ecology and Environmental Protection Faculty, vol. 2(2), pages 3-26, December.
    11. WolfgangOchel, 2004. "Competitive Tendering and Contracting of Temporary Work Agencies in Germany," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 2(02), pages 69-74, July.
    12. Peter Birch Sørensen, 2004. "Outsourcing of Public Service Provision: When is it More Efficient?," EPRU Working Paper Series 04-06, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
    13. Ian Lienert, 2005. "Are Laws Needed for Public Management Reforms? An International Comparison," IMF Working Papers 05/62, International Monetary Fund.
    14. Hinrichs, Karl, 2004. "Active Citizens and Retirement Planning: Enlarging Freedom of Choice in the Course of Pension Reforms in Nordic Countries and Germany," Working papers of the ZeS 11/2004, University of Bremen, Centre for Social Policy Research (ZeS).

    More about this item


    child care; choix de l'usager; contracting; coupons; dépenses publiques; education; efficience et incitations; efficiency and incentives; employment service; long-term care; partenariats public-privé; passation de contrats; public expenditure; public private partnerships; service pour l'emploi; soins aux enfants; soins de longue durée; user choice; vouchers; éducation;

    JEL classification:

    • C3 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables
    • D20 - Microeconomics - - Production and Organizations - - - General
    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
    • I00 - Health, Education, and Welfare - - General - - - General
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out


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