Private Operation with Public Supervision: Evidence of Hybrid Modes of Governance in Prisons
37 Pages Posted: 30 Sep 2007 Last revised: 7 Sep 2013
Date Written: January 1, 2010
Received theories suggest a possible cost-quality tradeoff when private outsourcing arrangements are used in public services. Using data from Brazilian prisons, our study provides evidence that contradicts this prediction: the prisons not only run at a lower cost, but also show similar or improved performance on a range of quality indicators. The attenuation of the cost-quality dilemma in our context is due to the hybrid management, which allocates control rights to a state-appointed public supervisor. We also discuss conditions in which the public supervisor may refrain from colluding with the private agent, therefore guaranteeing an effective monitoring of service quality.
Keywords: Hybrid governance, Public supervision, Prisons, Implicit contracts
JEL Classification: L33
Suggested Citation: Suggested Citation