The Effects of Organizational Form in the Mixed Market for Foster Care
Jeremy P. Thornton
Samford University - Brock School of Business
Morehead State University
Annals of Public and Cooperative Economics, Vol. 81, Issue 2, pp. 211-245, June 2010
This paper uses proprietary quality of care data to examine the consequences of organizational form in privatized US foster care services. The contract failure hypothesis generically proposes that nonprofits should provide higher quality services, relative to for-profits, when output is costly to observe. Advocates argue that the nonprofits offer important consumer protections when public services are contracted to private agencies. Contrary to expectations, we find that nonprofit firms do not offer higher quality services. We explore the possibility that monitoring efforts by state regulators or competition among foster care agencies effectively mitigate the influence of organizational form in this particular mixed market.
Number of Pages in PDF File: 35Accepted Paper Series
Date posted: May 24, 2010
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