Managing Markets for Public Service: The Role of Mixed Public–Private Delivery of City Services

TLDR

Municipal privatization has shifted from full contracts to mixed public–private delivery, while New Public Management, transaction‑cost economics, and New Public Service emphasize competition, contract challenges, and citizen engagement. City managers are adopting a middle‑ground approach that balances efficiency, market management, and citizen satisfaction by integrating markets with public delivery.

Abstract

The privatization experience of U.S. municipalities shows declining use of complete contracts and a dramatic rise in mixed public–private delivery (joint contracting) of city services. The analysis here shows that city managers have recognized the need to move beyond a simple dichotomy between market delivery and public planning to an approach that balances concerns with efficiency, market management, and citizen satisfaction. The New Public Management stresses the importance of competition and efficiency, transaction costs economics emphasizes the challenges of contract management, and New Public Service assigns primary concern to citizen engagement. Nonetheless, city managers see the need to balance all three. The analysis shows the evolution of a middle position where city managers integrate markets with public delivery and give greater attention to citizen satisfaction in the service delivery process.