Hostname: page-component-586b7cd67f-l7hp2 Total loading time: 0 Render date: 2024-11-25T03:00:43.313Z Has data issue: false hasContentIssue false
  • English
  • Français

Competition in the Mixed Economy of Care

Published online by Cambridge University Press:  20 January 2009

Julien Forder ,
Martin Knapp  and
Gerald Wistow
Get access Rights & Permissions [Opens in a new window]

Abstract

The 1990 National Health Service and Community Care Act introduced sweeping changes to health and social welfare services. The reforms to community care were dominated by the introduction of markets for social care. We argue that the new markets cannot be guaranteed to deliver the range of services required to meet community care objectives. When they began to assume their new responsibilities, few key purchasers had a basic understanding of the functioning and imperfections of markets. Consequently, they were poorly equipped to anticipate or ameliorate the sources of market failure that we identify. Like any other relatively ill-informed purchaser, local authorities risk being unable to buy what they want on behalf of their residents and at an appropriate volume, cost and quality. We discuss where and how market imperfections are likely to occur. In this context, we offer an economic framework to help in the shaping and managing of social care markets.

Type
Articles
Information
Journal of Social Policy , Volume 25 , Issue 2 , April 1996 , pp. 201 - 221
Copyright
Copyright © Cambridge University Press 1996

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

REFERENCES

Alchian, A. and Demsetz, H. (1972), ‘Production, information costs and economic organisation’, American Economic Review, 5: 777–95.Google Scholar
Atkinson, A. and Stiglitz, J. (1980), Lectures on Public Economics, McGraw-Hill, London.Google Scholar
Audit Commission (1993), Taking Care, Health and Personal Social Services Bulletin No. 1, Audit Commission, London.Google Scholar
Baldock, J. and Ungerson, C. (1993), ‘Consumer perceptions of an emerging mixed economy of care’, in Evers, A. and Svetlik, I. (eds.), Balancing Pluralism: New welfare mixes in care for the elderly, Avebury, Aldershot.Google Scholar
Baumol, W. J., Panzar, J. C. and Willig, R. D. (1982), Contestable Markets and the Theory of Industrial Structure, Harcourt Brace Jovanovich, New York.Google Scholar
Brown, C. and Jackson, P. (1986), Public Sector Economics, 3rd edn, Blackwell, Oxford.Google Scholar
Chillemi, O. and Gui, B. (1990), Uninformed Customers and Nonprofit Organisations: Modelling ‘Contract Failure Theory’, University of Trieste.Google Scholar
Department of Health (1991), Purchase of Service, Practice Guidance, HMSO, London.Google Scholar
Department of Health (1993), Community Care, EL (93) 119/CI (93) 35, Department of Health, London.Google Scholar
Dixit, A. (1980), ‘The role of investment in entry deterrence’, Economic Journal, 90: 95–106.CrossRefGoogle Scholar
Eaton, B. C. and Lipsey, R. G. (1978), ‘Freedom of entry and the existence of pure profit’, The Economic Journal, 88: 455–69.CrossRefGoogle Scholar
Forder, J. E. (1993), ‘Moral hazard, contracts and efficiency’, Discussion Paper 878/3, Personal Social Services Research Unit, University of Kent at Canterbury.Google Scholar
Forder, J. E. and Kendall, J. (1993), ‘The economics of voluntary and non-profit organisations in the UK: achievements and prospects’, Paper presented at conference, Researching the Voluntary and Non-Profit Organisations in the UK: The State of the Art, University of the South Bank, London.Google Scholar
Forder, J. E. and Knapp, M. R. J. (1993), ‘Social care markets: The voluntary sector and residential care for elderly people in England’, in Saxon-Harrold, S. and Kendall, J. (eds.), Researching the Voluntary Sector, vol. 1, Charities Aid Foundation, Tonbridge.Google Scholar
Granovetter, M. (1985), ‘Economic action and social structure: the problem of embeddedness’, American Journal of Sociology, 91, 3: 481–510.CrossRefGoogle Scholar
Gronjberg, K. (1990), ‘Managing nonprofit funding relations: case studies of six human service organisations’, Proceedings of the Independent Sector Spring Forum, Independent Sector, Washington, DC.Google Scholar
Hammond, P. J. (1990), ‘Theoretical progress in public economics: a provocative assessment’, Oxford Economic papers, 42: 6–33.CrossRefGoogle Scholar
Hansmann, H. (1980), ‘The role of nonprofit enterprise’, Yale Law Journal, 89: 853–98.CrossRefGoogle Scholar
Health Service Commissioner for England (1994), Failure to Provide Long-term NHS Care for a Brain-damaged Patient – Case Number: E.62/93–94, HMSO, London.Google Scholar
Henwood, M. and Wistow, G. (1991), Memorandum to House of Commons Social Security Committee, in House of Commons Social Security Committee. The Financing of Private Residential and Nursing Home Fees, Fourth Report, Session 1990–1991, HC421 – (II), HMSO, London.Google Scholar
Hey, J. and Lambert, P. (1987), Surveys in the Economics of Uncertainty, Blackwell, Oxford.Google Scholar
Hodgson, G. (1988), Economics and Institutions, Polity Press, Cambridge.CrossRefGoogle Scholar
Holmstrom, B. (1979), ‘Moral hazard and observability’, Bell Journal of Economics, 10: 74–91.CrossRefGoogle Scholar
Holmstrom, B. (1982), ‘Moral hazard in teams’, Bell Journal of Economics, 13: 324–40.CrossRefGoogle Scholar
Judge, K. and Knapp, M. R. J. (1985), ‘Efficiency in the production of welfare: the public and the private sectors compared, in Klein, R. and O'Higgins, (eds.), The Future of Welfare, Blackwell, London.Google Scholar
Klein, B. and Leffler, K. B. (1981), ‘The role of market forces in assuring contractual performance’, Journal of Political Economy, 89, 4: 615–42.CrossRefGoogle Scholar
Knapp, M. R. J. (1984), The Economics of Social Care, Macmillan, London.CrossRefGoogle Scholar
Knapp, M. R. J. (1986), ‘The relative cost-effectiveness of public, voluntary and private providers of residential child care’, in Culyer, A. and Jösson, B. (eds.), Public and Private Health Services, Blackwell, Oxford.Google Scholar
Knapp, M. R. J. and Kendall, J. (1991), ‘Policy issues for the UK voluntary sector in the 1990s’, Annals of Public and Cooperative Economics, 62: 711–31.CrossRefGoogle Scholar
Knapp, M. R. J., Koutsogeorgopoulou, V. and Davis-Smith, J. (1996), ‘Volunteer participation in community care’, Policy and Politics, forthcoming.CrossRefGoogle Scholar
Krashinsky, M. (1986), ‘Transactions costs and a theory of the nonprofit organisations’, in Rose-Ackerman, S. (ed.), The Economics of Nonprofit Institutions, Oxford University Press, Oxford.Google Scholar
Kreps, D. (1990a), ‘Corporate culture and economic theory’, in Alt, J. and Shepsle, K. (eds.), Perspectives on Positive Political Economy, Cambridge University Press, Cambridge.Google Scholar
Kreps, D. (1990b), A Course in Microeconomic Theory, Harvester Wheatsheaf, Brighton.CrossRefGoogle Scholar
Kreps, D. and Wilson, R. (1982), ‘Reputation and imperfect information’, Journal of Economic Theory, 27: 253–79.CrossRefGoogle Scholar
Lynn, P. and Davis-Smith, J. (1991), The 1991 National Survey of Voluntary Activity in the UK, Volunteer Centre UK, Berkhamsted.Google Scholar
Lyons, B. and Varoufakis, Y. (1980), ‘Game theory, oligopoly and bargaining’, in Hey, J. D. (ed.), Current Issues in Microeconomics, Macmillan, London.Google Scholar
Milgrom, P. and Roberts, J. (1982), ‘Predation, reputation, and entry deterrence’, Journal of Economic Theory, 27: 280–312.CrossRefGoogle Scholar
Musgrave, A. (1981), ‘“Unreal Assumptions” in economic theory: the F-Twist untwisted’, Kyklos, 34: 377–87.CrossRefGoogle Scholar
National Council for Voluntary Organisations (1992), The Vatman Cometh, Contracting In or Out? Spring, 8, NCVO, London.Google Scholar
Nelson, P. (1970), ‘Information and consumer behaviour’, Journal of Political Economy, 78: 311–29.CrossRefGoogle Scholar
Nelson, R. and Winter, S. (1982), An Evolutionary Theory of Economic Change, Belknap/Harvard University Press, Cambridge, MA.Google Scholar
Prescott, E. and Visscher, M. (1977), ‘Sequential location among firms with foresight’, Bell Journal of Economics, 8: 378–93.CrossRefGoogle Scholar
Radner, R. (1985), ‘Repeated partnership games with imperfect monitoring and no discounting’, Review of Economic Studies, 53: 43–58.CrossRefGoogle Scholar
Rasmusen, E. (1989), Games and Information: An Introduction to Game Theory, Blackwell, Oxford.Google Scholar
Rees, R. (1987), ‘The theory of the principal and agent: part I’, in Hey, J. and Lambert, P. (eds.), Surveys in the Economics of Uncertainty, Blackwell, Oxford.Google Scholar
Salop, S. (1979), ‘Monopolistic competition with outside goods’, Bell Journal of Economics, 10: 141–56.CrossRefGoogle Scholar
Schmalensee, R. (1978), ‘Entry deterrence in the ready-to-eat breakfast cereal industry’, Bell Journal of Economics, 9: 305–27.CrossRefGoogle Scholar
Seibel, W. (1990), ‘Government/third-sector relationship in a comparative perspective: the cases of France and West Germany’, Voluntas, 1, 1: 42–60.CrossRefGoogle Scholar
Simon, H. (1957), Models of Man, John Wiley and Sons, New York.Google Scholar
Steinberg, R. (1987), ‘Nonprofit organisations and the market’, in Powell, W. W. (ed.), The Nonprofit Sector: A Research Handbook, Yale University Press, New Haven.Google Scholar
Steinberg, R. (1989), ‘The theory of crowding-out: donations, local government spending and the new federalism’, in Magat, R. (ed.), Philanthropic Giving, Oxford University Press, Oxford.Google Scholar
Tirole, J. (1988), The Theory of Industrial Structure, MIT Press, Cambridge, MA.Google Scholar
Vickers, J. and Yarrow, G. (1988), Privatisation: An Economic Analysis, MIT Press, Cambridge, MA.Google Scholar
Vladeck, B. (1980), Unloving Care: The Nursing Home Tragedy, Basic Books, New York.Google Scholar
Walsh, K. (1989), ‘Competition and service in local government’, in Stewart, J. and Stoker, G. (eds.), The Future of Local Government, Macmillan, London.Google Scholar
Waterson, M. (1988), Regulation of the Firm and Natural Monopoly, Blackwell, Oxford.Google Scholar
Williamson, O. E. (1975), Markets and Hierarchies, Free Press, New York.Google Scholar
Williamson, O. E. (1985), The Economic Institutions of Capitalism, Free Press, New York.Google Scholar
Wistow, G., Knapp, M. R. J., Hardy, B. and Allen, C. (1994), Social Care in a Mixed Economy, Open University Press, Buckingham.Google Scholar
Wistow, G., Knapp, M. R. J., Hardy, B., Forder, J., Kendall, J. and Manning, R. (1996), Social Care Markets: Progress and Prospects, Open University Press, Buckingham, forthcoming.Google Scholar