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Prison Privatization Turns Twenty-Five: The Evolution of a Mature Private Prison Industry in the United States

Richard Culp

John Jay College of Criminal Justice

July 15, 2009

This paper examines the current level of competition and innovation in the private prison industry in the US. The author places twenty-five years of private prison business development within an industrial life cycle framework and argues that the realities of the mature prison privatization market do not match the promise of innovation and quality improvements voiced by privatization advocates during the 1980s and early 1990s. Analysis by way of the four firm market concentration ratio and the Herfindahl-Hirschman Index (HHI) at two points in time shows the market to be dominated by decreasingly fewer companies (an oligopoly of producers). At the same time, the number of government jurisdictions buying incarceration services is small and shrinking, resulting in an oligopsony of consumers. The net effect is that any real cost advantages of privatization are marginal at best, private prison programs have become virtually indistinguishable from public prisons, and the promise of innovation remains unfulfilled. The article concludes with a discussion of policy implications, including the idea of increasing the role of the non-profit sector in the operation of secure correctional facilities.

Number of Pages in PDF File: 38

Keywords: prisons, corrections, criminal justice policy, privatization

JEL Classification: D43, E65, L13, L33

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Date posted: August 28, 2009  

Suggested Citation

Culp, Richard, Prison Privatization Turns Twenty-Five: The Evolution of a Mature Private Prison Industry in the United States (July 15, 2009). Available at SSRN: http://ssrn.com/abstract=1462792 or http://dx.doi.org/10.2139/ssrn.1462792

Contact Information

Richard Culp (Contact Author)
John Jay College of Criminal Justice ( email )
445 West 59th Street
New York, NY 10019
United States
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