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The Proper Scope of Government: Theory and an Application to Prisons
Open accessAbstract
When should a government provide a service in-house, 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 has. However, the private contractor's incentive to engage in cost reduction is typically too strong because he ignores the adverse effect on noncontractible quality. The model is applied to understanding the costs and benefits of prison privatization.
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Citations
Cited by
A Survey of Corporate Governance
Shleifer, A., & Vishny, R. W. (1997) · The Journal of Finance · doi:10.1111/j.1540-6261.1997.tb04820.x · Cited by 16,243
Self-citationState versus private ownership
Shleifer, A. (1998) · Journal of Economic Perspectives · doi:10.1257/jep.12.4.133 · Cited by 1,266
Self-citationDjankov, S., Glaeser, E., La Porta, R., Lopez-de-Silanes, F., & Shleifer, A. (2003) · Journal of Comparative Economics · doi:10.1016/j.jce.2003.08.005 · Cited by 1,204
Self-citationActive and Passive Waste in Government Spending: Evidence from a Policy Experiment
Bandiera, O., Prat, A., & Valletti, T. (2009) · American Economic Review · doi:10.1257/aer.99.4.1278 · Cited by 534
Shleifer, A. (2005) · European Financial Management · doi:10.1111/j.1354-7798.2005.00291.x · Cited by 350
Self-citationRegulating Service Quality: A Survey
Sappington, D. E. M. (2005) · Journal of Regulatory Economics · doi:10.1007/s11149-004-5341-9 · Cited by 191
Freyburg, T., Garbe, L., & Wavre, V. (2023) · The Review of International Organizations · doi:10.1007/s11558-022-09483-z · Cited by 9
What is the Best Response? Examining the Impact of Police and Their Alternatives
Ba, B., Chen, P., Cheng, T., Eies, M., & Holz, J. (2025) · National Bureau of Economic Research · doi:10.3386/w34344 · Cited by 2
Metadata
- Authors
- Hart, O., Shleifer, A., & Vishny, R. W.
- Venue
- The Quarterly Journal of Economics
- Publisher
- Oxford University Press (OUP)
- Published
- 1997-11-01
- Volume
- 112
- Issue
- 4
- Pages
- 1127-1161
- ISSN
- 0033-5533 (ISSN-L)
- 1531-4650
- OpenAlex
- W2100746853
- Cited by
- 1,763
- References
- 0
- FWCI
- 81.59
- Type
- journal article
- Language
- en
- Open access
- bronze
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Contains information from the Semantic Scholar Academic Graph Datasets, made available under the ODC Attribution License (ODC-BY 1.0).
Semantic Scholar’s data is described in: Kinney, R., et al. (2023). The Semantic Scholar Open Data Platform. arXiv:2301.10140.
