Public–Private Mixed Delivery and Information Effects

17 Pages Posted: 7 Dec 2017

See all articles by Illoong Kwon

Illoong Kwon

Seoul National University

Sangin Park

Seoul National University

Date Written: January 2018

Abstract

This paper analyses public–private mixed delivery of essential public services under price regulation. A private firm may have lower production costs and can potentially provide a performance benchmark for a public firm. A public firm may offer higher‐quality service and can reveal the production cost of the private firm to the regulator. However, this paper shows that public–private mixed delivery does not always dominate public delivery or private delivery. Mixed delivery is optimal only when (i) the cost uncertainty of the private firm is large, (ii) the managerial incentive problem of the public firm is large, and (iii) the performances of the public and private firms are highly correlated.

Suggested Citation

Kwon, Illoong and Park, Sangin, Public–Private Mixed Delivery and Information Effects (January 2018). Economica, Vol. 85, Issue 337, pp. 75-91, 2018. Available at SSRN: https://ssrn.com/abstract=3083168 or http://dx.doi.org/10.1111/ecca.12203

Illoong Kwon (Contact Author)

Seoul National University ( email )

Graduate School of Public Administration
599 Gwanak-ro
Gwanak-gu, Seoul 151-742
Korea, Republic of (South Korea)
82-2-880-8551 (Phone)
82-2-877-2411 (Fax)

HOME PAGE: http://www.albany.edu/~ik325357/

Sangin Park

Seoul National University ( email )

Seoul
Korea, Republic of (South Korea)

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