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Paper #997

Does privatising public service provision reduce accountability?
Matthew Ellman
Octubre 2006
This paper studies how privatising service provision (shifting control rights and contractual obligations to providers) affects accountability. There are two main effects. (1) Privatisation demotivates governments from investigating and responding to public demands, since providers then hold up service adaptations. (2) Privatisation demotivates the public from mobilising to pressure for service adaptations, since providers then indirectly holdup the public by inflating the government’s cost of implementing these adaptations. So, when choosing governance mode, politicians may be biased towards privatising as a way to escape public attention; relatedly, privatising utilities may reduce public pressure and increase consumer prices.
Paraules clau:
Public Services, Privatisation, Voter Mobilisation, Accountability, Government Responsiveness, Contract Length, Incomplete Contracts, Holdup
Codis JEL:
Àrea de Recerca:
Finances i Comptabilitat

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