Hefetz, Amir and Mildred E. Warner. 2012. "Contracting or Public Delivery? The importance of service, market and management characteristics." Journal of Public Administration Research and Theory, 22(2): 289-317.

Analysis of local government contracting decisions typically focuses on transactions costs related to service characteristics, especially asset specificity and difficulty of contract management. This analysis expands the focus to include market characteristics (competition), citizen characteristics (public interest in the service delivery process), and place characteristics (metro status and public management). A 2007 survey of U.S. city managers’ rankings of 67 services by transactions costs, competition and citizen interest is combined with a 2007 national survey of city managers’ sourcing decisions (direct public, inter-government cooperation, for profit and non-profit contracting). Multinomial logit models of service delivery sourcing choice find metro status and competition are key explanatory variables. Inter-governmental cooperation represents an important public market alternative when contract management is difficult and competition is low. For profit contracting is less common when citizen interest is high and competition is low. Governments with professional managers appear more effective in addressing citizen interests, political and labor opposition and market management challenges.

If you would like an electronic copy of this article and it is not available through your library, please email Professor Warner at mew15 "at" cornell.edu.

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Subject: Privatization