Private Operation with Public Supervision: Evidence of Hybrid Modes of Governance in Prisons

Sandro Cabral (Federal University of Bahia - Brazil)
Sergio Lazzarini (IBMEC- SP - Brazil)
Paulo Furquim de Azevedo (FGV-SP - Brazil)

Abstract: In this paper, we claim that private provision of public services by means of a "hybrid" mode - in which state-appointed supervisors are responsible for monitoring the operations of a private agent - not necessarily present the trade-off between cost reduction at the expense of service quality as foreseen by the received theories. For that, we develop a model to describe the underlying mechanisms supporting such hybrid governance and conditions in which private operation with public supervision will be able to achieve satisfactory quality levels while still preserving incentives for cost reduction. Our model is supported by quantitative and qualitative evidence from prisons in Brazil. Results demonstrate that the hybrid governance exhibits lower costs and superior service quality as compared to traditional public mode of provision. Finally, we address some implications for the design and the organization of public services.


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