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Competitive Neutrality and the Cost and Quality of Welfare Services


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Title: Competitive Neutrality and the Cost and Quality of Welfare Services
Authors: Stennek, Johan
Issue Date: Aug-2017
Extent: 52
Publication type: report
Organization: Dept. of Economics, University of Gothenburg
Series/Report no.: Working Papers in Economics
704
Keywords: public-private competition
competitive neutrality
mixed markets
public option
ownership
competition
incomplete contracts
strategic ambiguity
merit goods
SGEI
Abstract: Competition between private and public firms can increase service quality and reduce public costs in markets for tax-financed welfare services with non-contractible quality. Synergies arise from combining high-powered incentives for quality provision (emanating from private firms) with low rents (public firms). The optimal regulation directs the government to provide public firms with better funding than private competitors, e.g. paying them higher prices or covering their deficits. This additio... more
ISSN: 1403-2465
Description: JEL: H44; L33; L44
URI: http://hdl.handle.net/2077/53528
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