The Proper Scope of Government: Theory and an Application to Prisons / Oliver Hart, Andrei Shleifer, Robert W. Vishny.

Format:

Book

Author/Creator:

Hart, Oliver.

Contributor:

National Bureau of Economic Research.

Shleifer, Andrei.

Vishny, Robert W.

Series:

Working Paper Series (National Bureau of Economic Research) no. w5744.

NBER working paper series no. w5744

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

The Proper Scope of Government

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1996.

Summary:

When should a government provide a service inhouse and when should it contract out provision? We develop a model in which the provider can invest in improving the quality of service or reducing cost. If contracts are incomplete, the private provider has a stronger incentive to engage in both quality improvement and cost reduction than a government employee. However, the private contractor's incentive to engage in cost reduction is typically too strong because he ignores the adverse effect on non-contractible quality. The model is applied to understanding the costs and benefits of prison privatization.

Notes:

Print version record

September 1996.