Should We Change the Way We Think About Market Performance When It Comes to Quasi‐Markets? A New Framework for Evaluating Public Service Markets

• Published date: 01 September 2022
• Author: Helen Dickinson,Gemma Carey,Eleanor Malbon,David Gilchrist,Satish Chand,Anne Kavanagh,Damon Alexander
• Date: 01 September 2022
• DOI: http://doi.org/10.1111/puar.13392

A New Framework for Evaluating Public Service Markets 897

Public Administration Review,

Vol. 82, Iss. 5, pp. 897–901. © 2021 by

The American Society for Public Administration.

DOI: 10.1111/puar.13392.

Should We Change the Way We Think About Market

Performance When It Comes to Quasi-Markets? A New

Framework for Evaluating Public Service Markets

Abstract: Markets are increasingly used by governments to deliver social services, underpinned by the belief that they

can drive efficiency and quality. These ‘quasi-markets’ require on-going management to ensure they meet policy goals,

and address issues of market inequity. This has seen debates emerge around ‘market stewardship’ and ‘market shaping’

that center on how best to manage markets toward optimal policy outcomes. At present, there is a significant gap in

both literature and practice with regard to what types of actions are most effective for market stewardship. In this

article, we outline a framework that helps diagnose different quasi-market problems. We delineate two dimensions

of public service quasi-markets—sufficiency and diversity—using the example of a disability personalization

market to show how this framework can unpack different types of quasi-market states. Lastly, we outline the types of

interventions that might be adopted to help deal with ineffective quasi-markets.

Evidence for Practice

• Market mechanisms are increasing being used by governments around the world to drive innovation and

efficacies.

• Increasingly it is being recognized that these markets need intervention in order to meet policy goals.

• This paper provides a framework for conceptualizing types of market problems, and offers solutions for the

scenarios outlined.

Around the world, markets, in various forms,

are increasingly being used by governments

as a tool in the delivery of social and care

services with an aim of driving quality and efficiency.

It is well recognized that many of these do not

operate as ‘conventional markets’, giving rise to

the term ‘quasi-markets’. A range of studies have

found that quasi-markets do not always operate

effectively and in some case there is evidence of

significant market failure (Carey et al.2020). This

points to the need for good quality evidence about

how effective stewardship of markets should be

undertaken and the types of approaches that market

stewards can use to address issues of quasi-market

performance. Yet, we find a significant gap in the

literature relating to what market stewards should

do to effectively oversee quasi-markets. Against this

background, this article sets out the market capacity

framework to support the identification of different

types of quasi-market functionality. In doing so, we

delineate two dimensions of public service quasi-

markets—sufficiency and diversity—and argue

that their intersection gives rise to different types of

quasi-market outcomes. With relevance to quasi-

markets in disability support, health, and education,

the framework offers ways to differentiate states of

quasi-market, and the impacts of these on consumers.

Further, we outline the types of interventions that

might be adopted to help deal with ineffective quasi-

markets.

Markets and Quasi Markets

Markets have become a tool of choice for governments

around the world in transforming public service

sectors. Proponents of market-based reforms argue

these can be effective in driving efficiencies and

creating services that are better tailored to what

consumers want (Miranda and Lerner1995). There

are vast volumes of literature that debate whether

or not this is a desirable state (e.g. Warner and

Hefetz2002), but the reality is that in many countries

they are central to public service systems and are

unlikely to be removed any time soon. The question

then emerges about how best we manage these

markets.

Market management to some extent runs contrary

to conventional neo-classical economics. Much

of this literature sees governments having limited

involvement outside of providing a broad legal

framework (see Friedman1962), with markets

working in a self-regulatory capacity. However, public

Helen Dickinson

Gemma Carey

Eleanor Malbon

David Gilchrist

Satish Chand

University of New South Wales Canberra

Anne Kavanagh

Damon Alexander

David Gilchrist is a chartered accountant

and an economic historian. He holds a PhD in

economics from the University of Notre Dame

Australia and is currently professor of accounting

at the University of Western Australia.

Email: david.gilchrist@uwa.edu.au

Satish Chand is a Professor of Finance in

the School of Business at the University of

New South Wales and based at the Australian

Defense Force Academy in Canberra. For the

past 5 years, Satish has been researching the

nexus between defense and development,

drawing on the experiences of external

peacekeeping in Bougainville (PNG), East Timor,

Liberia, Mozambique, and the Solomon Islands.

Email: s.chand@adfa.edu.au

Anne Kavanagh is a Professor of Disability

and Health. Anne is an epidemiologist.

She has an international reputation for her

research on health inequities particularly as

it relates to people with disability. Her work

in the field of health inequities spans a range

of social determinants including disability,

gender, the built environment, socioeconomic

position, employment, and housing.

Email: a.kavanagh@unimelb.edu.au

Damon Alexander is a Senior Lecturer in

Politics and Public Policy in the Department

of Social Sciences. His expertise are in

network analysis, particularly in political and

social service contexts.

Email: dtalexander@swin.edu.au

University of New South Wales Canberra

University of New South Wales

University of Western Australia

University of Melbourne

Swinburne University

Eleanor Malbon is a research fellow, her

areas of expertise are systems methods,

quasi-markets, and inequality.

Email: e.malbon@unsw.edu.au

Gemma Carey is a Professor of Social Policy

and Academic Director of the Centre for Social

Impact at UNSW. She works with governments

and non-government organizations to

identify and change structures and processes

regarding policy implementation that impact

inequality. She has worked extensively on

joined-up government reforms and disability

service markets.

Email: gemma.carey@unsw.edu.au

Helen Dickinson is a Professor of Public

Service Research and Director of the Public

Service Research Group at the School of

Business, University of New South Wales,

Canberra. Her expertise is in public services,

particularly in relation to topics such as

disability policy and practice.

Email: h.dicksinon@adfa.edu.au

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