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Public provision and private incentives

Sandmo, Agnar
Working paper
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URI
http://hdl.handle.net/11250/162892
Date
2002-09
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  • Discussion papers (SAM) [676]
Abstract
This paper surveys classical and modern arguments for public production and

provision of goods. It reviews the conventional case for public production under

conditions of increasing returns and discusses the modifications that have to be made

if public production involves a cost inefficiency. It then discusses the causes behind a

possible cost inefficiency, such as the difficulty of designing good incentive schemes

in agencies with multiple and complex objectives. An alternative to designing better incentives in the public sector is that of contracting out to private firms, and the

conditions favourable to this alternative are also discussed.
Publisher
Norwegian School of Economics and Business Administration. Department of Economics
Series
Discussion paper
2002:18

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