Sustainability of Public Services: Is Outsourcing the Answer?

Sánchez Soliño, Antonio (2019). Sustainability of Public Services: Is Outsourcing the Answer?. "Sustainability", v. 11 (n. 24); p. 7231. ISSN 2071-1050. https://doi.org/10.3390/su11247231.

Description

Title: Sustainability of Public Services: Is Outsourcing the Answer?
Author/s:
  • Sánchez Soliño, Antonio
Item Type: Article
Título de Revista/Publicación: Sustainability
Date: 17 December 2019
ISSN: 2071-1050
Volume: 11
Subjects:
Freetext Keywords: Outsourcing, Performance Pay, Public Service, Public Provision
Faculty: E.T.S.I. Caminos, Canales y Puertos (UPM)
Department: Ingeniería Civil: Construcción
Creative Commons Licenses: Recognition - No derivative works - Non commercial

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Abstract

The outsourcing of public services has acquired a prominent position in the political agenda of many countries in recent decades. This paper contributes an analysis of the outsourcing of a public service under a theoretical framework based on a multitask principal-agent model. For the management of the service, a contract is assumed that includes certain incentives to the contractor linked to the outcomes in two types of activities: the first related to cost saving, and the second related to the improvement of the quality of the service. The main results of the paper show, in the first place, the conditions under which the outsourcing of a public service is economically unfeasible. Additionally, the paper shows that, under perfect information conditions, the optimal incentives include the contractor retaining all the cost savings. On the contrary, under conditions of asymmetric information on the quality of the service, the contract should stipulate a certain distribution of the cost savings between the public authority and the contractor. More in general, the formalization of the model presented in this work can contribute to a better understanding of the role of the contracts, and therefore to their improvement.

More information

Item ID: 64451
DC Identifier: http://oa.upm.es/64451/
OAI Identifier: oai:oa.upm.es:64451
DOI: 10.3390/su11247231
Official URL: https://www.mdpi.com/2071-1050/11/24/7231
Deposited by: Memoria Investigacion
Deposited on: 13 Oct 2020 13:45
Last Modified: 13 Oct 2020 13:45
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