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Does privatising public service provision reduce accountability?

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  • Matthew Ellman

Abstract

This paper studies how privatising service provision (shifting control rights and contractual obligations to providers) affects accountability. There are two main effects. (1) Privatisation demotivates governments from investigating and responding to public demands, since providers then hold up service adaptations. (2) Privatisation demotivates the public from mobilising to pressure for service adaptations, since providers then indirectly holdup the public by inflating the government’s cost of implementing these adaptations. So, when choosing governance mode, politicians may be biased towards privatising as a way to escape public attention; relatedly, privatising utilities may reduce public pressure and increase consumer prices.

Suggested Citation

  • Matthew Ellman, 2006. "Does privatising public service provision reduce accountability?," Economics Working Papers 997, Department of Economics and Business, Universitat Pompeu Fabra.
    • Handle: RePEc:upf:upfgen:997
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    References listed on IDEAS

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    Cited by:

    1. Bennedsen, Morten & Schultz, Christian, 2011. "Arm's length delegation of public services," Journal of Public Economics, Elsevier, vol. 95(7), pages 543-552.
    2. P.W.J. de Bijl & Helanya Fourie, 2019. "The energy transition: Does ownership matter for realizing public interest objectives?," Working Papers 19-24, Utrecht School of Economics.
    3. Morten Bennedsen & Christian Schultz, 2007. "Arm’s Length Provision of Public Services," CESifo Working Paper Series 2161, CESifo.
    4. Laure ATHIAS & Raphael SOUBEYRAN, 2012. "Less Risk, More Effort: Demand Risk Allocation in Incomplete Contracts," Working Papers 12-20, LAMETA, Universtiy of Montpellier, revised Jun 2012.
    5. Athias, Laure, 2007. "Political accountability, incentives, and Contractual design of public private partnerships," MPRA Paper 10538, University Library of Munich, Germany.
    6. Athias, Laure & Wicht, Pascal, 2014. "Cultural Biases in Public Service Delivery: Evidence from a Regression Discontinuity Approach," MPRA Paper 60639, University Library of Munich, Germany.

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    More about this item

    Keywords

    Public Services; Privatisation; Voter Mobilisation; Accountability; Government Responsiveness; Contract Length; Incomplete Contracts; Holdup;
    All these keywords.

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights

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