This table updates and expands an earlier 1982 compilation of studies on the effect of competition on the costs of government services.[1] It references over one hundred independent studies of increased competition in specific government services and the cost discrepancies observed. Studies that collected quantitative results usually demonstrated cost savings of 20 percent to 50 percent as a result of increased competition.

The primary method of increasing competition is contracting out public services to private firms. However, this is not the only method of increasing competition examined in the studies presented in the table. Findings from two other methods of increasing competition are also detailed.

One alternative is allowing management and workers of the in-house government unit to bid against private firms. The other method is termed "intergovernmental contracting" and refers to agreements between two or more government jurisdictions to purchase service form another government. Competition takes place between in-house units in all the jurisdictions that might contract with each other.


[1] Borcherding, T., W. Pommerehene, and F. Schneider, "Comparing the Efficiency of Private and Public Production: the Evidence from Five Countries," Journal of Economics (suppl. 2), 1982, 127-56.