Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/173035
Authors: 
Besley, Timothy
Malcomson, James
Year of Publication: 
2017
Series/Report no.: 
CESifo Working Paper 6759
Abstract: 
With public services such as health and education, it is not straightforward for consumers to assess the quality of provision. Many such services are provided by monopoly not-for-profit providers and there is concern that for-profit providers may increase profit at the expense of quality. This paper explores whether entry by for-profit providers is good for consumers despite the problem of unobserved quality. The model generates three key policy-relevant insights. First, by developing a novel approach to competition between different organizational forms, it frames the relevant trade-offs precisely. Second, it shows the value of keeping an incumbent not-for-profit as an active provider. Third, it characterizes the optimal payment (or voucher value) to an entrant for each consumer who switches in a way that can be applied empirically.
Subjects: 
public services
competition
not-for-profit providers
JEL: 
H11
H44
L21
L31
Document Type: 
Working Paper

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