In the late 1980s, governments in many western economies began to introduce competition between public agencies providing health, education, and other forms of social welfare. Government became a contracting agency separating funding from provision. The United Kingdom went farthest in legislation passed between 1988 and 1990. The authors review some possible explanations for this fundamental change. The article draws on public choice theory and broader political science approaches and reviews the evidence on the impact of the changes. The gains from these changes may be small, and the result may be only the build up of pressure for more spending in the longer term.
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