Outsourcing Public Services: Contractibility, Cost, and Quality

Reprint No. 2019:53

Author(s): Fredrik Andersson, Henrik Jordahl and Jens JosephsonYear: 2019 Title: CESifo Economic Studies Volume (No.): 65 (4) Pages: 349–372
Online article (restrictions may apply)

Outsourcing Public Services: Contractibility, Cost, and Quality Fredrik Andersson, Henrik Jordahl and Jens Josephson

We review the literature on public sector outsourcing to explore if the theoretical predictions from the incomplete contracts literature hold up to recent empirical evidence. Guided by theory, we arrange services according to the type and magnitude of their contractibility problems. The empirical studies point at rather favourable outsourcing outcomes, in terms of costs and quality, for services without severe contracting problems. The picture is more mixed for services with tougher contracting problems, with the weight of the evidence in favour of public provision. This difference between services is largely in line with the property-rights framework and theories of incomplete contracts.

Andersson, Fredrik, Henrik Jordahl and Jens Josephson (2019), "Outsourcing Public Services: Contractibility, Cost, and Quality". CESifo Economic Studies 65(4), 349–372.

Henrik Jordahl


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Jens Josephson


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Interdisciplinary European Studies

The European Union and the Return of the Nation State


This book explores the complex and ever-changing relationship between the European Union and its member states. The recent surge in tension in this relationship has been prompted by the actions of some member state governments as they question fundamental EU values and principles and refuse to implement common decisions seemingly on the basis of narrowly defined national interests.

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