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Privatization of State Administrative Services

28 Pages Posted: 5 Mar 2008 Last revised: 2 May 2011

Drury D. Stevenson

South Texas College of Law

Date Written: August 6, 2008


Privatization of government services has been touted as a cost-savings approach for state agencies, promising to harness the efficiencies of market forces to overcome the perceived inefficiencies of bureaucracies. Empirical and anecdotal evidence indicates that such savings rarely materialize, and instead outsourcing is often a bad deal for taxpayers. This paper explores the inherent problems in the contractual arrangements for these attempts at government outsourcing. Perverse incentives, transaction costs, non-competitive bidding, the nature of government services handled on the state level, and conflicting legal rules regarding interpretation all contribute to the failure of privatization for the states.

Keywords: privatization, delegation, nondelegation, administrative, government, contracts, transaction costs

JEL Classification: L33, H57, H41, H51, H53, H72, H70, I38, K23, D73

Suggested Citation

Stevenson, Drury D., Privatization of State Administrative Services (August 6, 2008). Louisiana Law Review, Vol. 68, p. 114, 2008 . Available at SSRN:

Drury Stevenson (Contact Author)

South Texas College of Law ( email )

1303 San Jacinto Street
Houston, TX 77002
United States
713-646-1897 (Phone)


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