Private Outsourcing and Competition: Subsidized Food Distribution in Indonesia
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PrivateOutsourcingandCompetition.pdf
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Author(s)
Banerjee, Abhijit
Hanna, Rema
Kyle, Jordan
Olken, Benjamin
Sumarto, Sudarno
Date Issued
February 2019
Journal
Journal of Political Economy
Publisher
University of Chicago Press
Citation
Banerjee, Abhijit et al. "Private Outsourcing and Competition: Subsidized Food Distribution in Indonesia."Journal of Political Economy 127, 1 (February 2019): 101-137 © 2019 by The University of Chicago
Version
Final published version
Abstract
We explore the impact of allowing for outsourcing service delivery to the private sector within Indonesia’s largest targeted transfer program. In a field experiment across 572 municipalities, we find that allowing for outsourcing the last mile of food delivery reduced operating costs without sacrificing quality. However, the prices citizens paid were lower only where we modified the bidding rules to encourage more bidders. Higher rents are associated with greater entry despite elites’ efforts to block reform. In this context, the option to outsource and sufficient competition generated significant benefits relative to public distribution.
MIT Department
Massachusetts Institute of Technology. Department of Economics and Engineering
Terms of Use
Article is made available in accordance with the publisher's policy and may be subject to US copyright law. Please refer to the publisher's site for terms of use.
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DOI of Published Version
https://doi.org/10.1086/700734
