ABSTRACT
INTRODUCTION This chapter assesses the thesis that governments can reduce the costs of public services and improve their efficiency and quality by fostering competition among public service organizations. This thesis plays a central role in many New Public Management (NPM) arguments. Drawing on neoliberal economic theories, adherents of NPM assert that public budgeting and hierarchical controls create perverse incentives for waste and rigidity. In contrast, downsizing, internal and external contracting, and especially competition are expected to transform publicsector organizations. According to this view, when publicly owned or publicly funded organizations are forced to compete with one another and with privatesector firms, the public organizations become more productive, efficient, accountable, and responsive to clients and deliver higher-quality services.
