OECD Economics Department Working Papers

Working papers from the Economics Department of the OECD that cover the full range of the Department’s work including the economic situation, policy analysis and projections; fiscal policy, public expenditure and taxation; and structural issues including ageing, growth and productivity, migration, environment, human capital, housing, trade and investment, labour markets, regulatory reform, competition, health, and other issues.

The views expressed in these papers are those of the author(s) and do not necessarily reflect those of the OECD or of the governments of its member countries.

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Market Mechanisms in Public Service Provision

This paper presents a new set of institutional indicators that assess how sub-central governments harness market mechanisms such as tendering, outsourcing, user choice and competition, user fees and output-related funding when providing public services. Services put under scrutiny comprise primary, secondary and tertiary education, hospital care, childcare and elderly care, public transport, and waste collection. Results indicate that governments are often reluctant to apply market mechanisms when providing public services. “Technical” services such as transport or waste collection are more open to market mechanisms than “social” services like education or health care. Regulatory innovations such as tendering, competition or user choice are more advanced than financial innovations like user fees or output-related funding for service providers.


Keywords: user choice, competition, public services, privatisation, fiscal federalism
JEL: H42: Public Economics / Publicly Provided Goods / Publicly Provided Private Goods; H77: Public Economics / State and Local Government; Intergovernmental Relations / Intergovernmental Relations; Federalism; Secession; H50: Public Economics / National Government Expenditures and Related Policies / National Government Expenditures and Related Policies: General
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