Market Mechanisms in Public Service Provision

This paper presents a new set of institutional indicators that assess how sub-central governmentsharness market mechanisms such as tendering, outsourcing, user choice and competition, user fees andoutput-related funding when providing public services. Services put under scrutiny comprise primary,secondary and tertiary education, hospital care, childcare and elderly care, public transport, and wastecollection. Results indicate that governments are often reluctant to apply market mechanisms whenproviding public services. “Technical” services such as transport or waste collection are more open tomarket mechanisms than “social” services like education or health care. Regulatory innovations such astendering, competition or user choice are more advanced than financial innovations like user fees oroutput-related funding for service providers.