Beyond the market versus planning dichotomy: Understanding privatisation and its reverse in US cities

Abstract

City service delivery requires planners and city managers to move beyond the public–private dichotomy and explore the benefits of interaction between markets and planning. Using International City County Management survey data on US local governments from 1992, 1997 and 2002, we find a shift where reverse contracting (re-internalisation) now exceeds the level of new contracting out (privatisation). We model how a theoretical shift from new public management to new public service in public administration mirrors a behavioural shift among city managers. Results confirm the need to balance economic concerns with political engagement of citizens and lend empirical support to a theory of social choice that links communicative planning with market management.

Acknowledgements

Funding for this research was provided in part by the National Research Initiative of the Cooperative State Research, Education and Extension Service, U.S. Dept. of Agriculture, Grant No. NYC-121524.

Notes

1 The construction of these variables is as follows: for asset specificity, the score is the average of asset specificity across all services provided times the percentage of services provided entirely by public employees. The measurability score is the average measurability score across all services provided times the percentage contracted out to private firms.

2 The voice index is the average number of yes responses to the following set of factor questions: active citizen group favouring privatisation; opposition from citizens; evaluation of feasibility by service recipients/consumers; evaluation of feasibility by citizen's advisory committees; established a citizens' advisory committee on private alternatives; surveyed citizens during implementation; kept the service complaint mechanism in-house; monitored citizen satisfaction after implementation; conducted citizen surveys after implementation, monitoring citizen complaints.

• One of the reviewers was concerned that the voice measure would fail to capture the role of voice among respondents who did not contract out any services. We checked the data and found 99 per cent of the sample restructured service delivery. Only 1 per cent of the sample did not externalise any services (5 places in 1992, 7 in 1997 and 5 in 2002).

3 In the probit model, percentages are transformed into the inverse of the cumulative normal distribution so that probabilities that range from zero to one are normally distributed all along the scale.

4 The marginal effect is the percentage increase or decrease in contracting out, or in reverse contracting, as a result of adding one extra unit of the independent variable. For continuous variables, this unit is the difference between the mean minus one standard deviation and the mean plus one standard deviation, while for a dichotomous variable it is the probability between zero and one units of this variable.