Managing a Correctional Marketplace: Prison Privatization in the United States and the United Kingdom

Abstract

This paper traces the recent history and development of privately operated prisons in the United States and the United Kingdom, and it compares their current role in the countries' correctional systems. The privatization movements of the U.S. and the U.K. were driven by similar factors, but the relative weight of these factors varied between the two. In the U.S., legal pressures to alleviate prison overcrowding and fiscal incentives to contract out prison construction were stronger, while in the U.K. the ideological and political aims of the governing party exerted more influence in stimulating privatization. America's experience with private prisons in the 1980s set an important precedent for Britain, but the U.K. ultimately adopted a different model of privatization. Although results are not conclusive to date, it appears the British model of regulating private prisons - with highly prescriptive contracts, multiple levels of monitoring, and output-based evaluations - has yielded superior performance from the private sector. Better designed regulatory frameworks would allow both countries to realize more of the potential benefits of private prisons while minimizing the possibilities for abuse.

Keywords: Correctional regulation, prison privatization, provision of public goods

JEL Classification: H0, H1, H4, K0, K4