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THE EFFECTS OF ORGANIZATIONAL FORM IN THE MIXED MARKET FOR FOSTER CARE
Author(s) -
Thornton Jeremy,
Cave Lisa
Publication year - 2010
Publication title -
annals of public and cooperative economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.526
H-Index - 37
eISSN - 1467-8292
pISSN - 1370-4788
DOI - 10.1111/j.1467-8292.2010.00410.x
Subject(s) - business , competition (biology) , quality (philosophy) , market failure , state (computer science) , industrial organization , public economics , marketing , public relations , economics , microeconomics , political science , ecology , philosophy , epistemology , algorithm , computer science , biology
** : This paper uses proprietary quality of care data to examine the consequences of organizational form in privatized US foster care services. The contract failure hypothesis generically proposes that nonprofits should provide higher quality services, relative to for‐profits, when output is costly to observe. Advocates argue that the nonprofits offer important consumer protections when public services are contracted to private agencies. Contrary to expectations, we find that nonprofit firms do not offer higher quality services. We explore the possibility that monitoring efforts by state regulators or competition among foster care agencies effectively mitigate the influence of organizational form in this particular mixed market.