Quasi-Markets and Social Policy

Abstract

While there are numerous potential problems with quasi-markets, the old-style welfare state was itself far from perfect. Still, much remains to be discovered about quasi-markets. Some of the consequences of introducing them may be beneficial, others may not. What is important is not to take an a priori stand either for or against all of the ideas. In some ways, the present government has made a gift to economists analyzing social policy. Many of the ideas are directly amenable to economic analysis, both standard microeconomic theory and more recent developments, such as transactions costs analysis. The government also has provided a set of quasi-market experiments against which to test those theories. Properly monitored, these should be able to provide economists and other analysts of social policy with evidence as to whether, suitably adapted and extended, quasi-markets constitute the way forward for social policy or whether they are a retrograde development that will need reversing as soon as it is politically or practically feasible.