Public Choice

, Volume 145, Issue 1–2, pp 281–293 | Cite as

Private operation with public supervision: evidence of hybrid modes of governance in prisons

  • Sandro Cabral
  • Sergio G. Lazzarini
  • Paulo Furquim de Azevedo


Received theories suggest a possible cost-quality tradeoff when private outsourcing arrangements are used in public services. Using data from Brazilian prisons, our study provides evidence that contradicts this prediction: the prisons not only run at a lower cost, but also show similar or improved performance on a range of quality indicators. The attenuation of the cost-quality dilemma in our context is due to the hybrid management, which allocates control rights to a state-appointed public supervisor. We also discuss conditions in which the public supervisor may refrain from colluding with the private agent, therefore guaranteeing an effective monitoring of service quality.

Hybrid governance Public supervision Prisons Implicit contracts 

JEL Classification



Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. Baker, G., Gibbons, R., & Murphy, K. (1994). Subjective performance measures in optimal incentive contracts. The Quarterly Journal of Economics, 109(4), 1125–1156. CrossRefGoogle Scholar
  2. Becker, G., & Stigler, G. (1974). Law enforcement, malfeasance, and the compensation of enforcers. Journal of Legal Studies, 3(1), 1–18. CrossRefGoogle Scholar
  3. Cabral, S. (2007). Sobre a participação privada na gestão e operação de prisões no Brasil: Uma análise à luz da Nova Economia das Instituições. Organizações & Sociedade 14(40), 29–47. Google Scholar
  4. Cabral, S., & Azevedo, P. F. (2008). The modes of provision of prison services in a comparative perspective. Brazilian Administration Review, 5(1), 53–69. Google Scholar
  5. Dewatripont, M., Jewitt, I., & Tirole, J. (1999). The economics of career concerns, Part II: application to missions and accountability of government agencies. Review of Economic Studies, 66(1), 183–198. CrossRefGoogle Scholar
  6. Dilulio, J. J. (1988). What is wrong with private prisons. Public Interest, 92, 66–83. Google Scholar
  7. Dixit, A. (2002). Incentives and organizations in the public sector: an interpretative review. The Journal of Human Resources, 37(4), 696–727. CrossRefGoogle Scholar
  8. Gibbons, R., & Murphy, K. (1992). Optimal incentive contracts in the presence of career concerns: theory and evidence. Journal of Political Economy, 100(3), 468–505. CrossRefGoogle Scholar
  9. Greene, W. (1997). Econometric analysis (3rd edn.). New York: Prentice-Hall. Google Scholar
  10. Hart, O. (2003). Incomplete contracts and public ownership: remarks and application to Public-Private-Partnerships. The Economic Journal, 113, C69–C76. CrossRefGoogle Scholar
  11. Hart, O., Shleifer, A., & Vishny, R. W. (1997). The proper scope of government: theory and an application to prisons. The Quarterly Journal of Economics, 112(4), 1127–1161. CrossRefGoogle Scholar
  12. Humans Right Watch. (1998). O Brasil atrás das grades. (Accessed 18 June 2006).
  13. Kandel, E., & Lazear, E. (1992). Peer pressure and partnerships. Journal of Political Economy, 100, 801–816. CrossRefGoogle Scholar
  14. Levin, J., & Tadelis, S. (2007). Contracting for government services: theory and evidence from U.S. cities. NBER Working Paper Series—13350, August. Google Scholar
  15. Lukemeyer, A., & McCorkle, A. (2006). Privatization of prisons: Impact on prisons conditions. American Review of Public Administration, 36(2), 189–206. CrossRefGoogle Scholar
  16. Makadok, R., & Coff, R. (2009). Both market and hierarchy: an incentive-systems theory of hybrid governance forms. Academy of Management Review, 34(2), 297–319. Google Scholar
  17. McCullagh, P., & Nedler, J. A. (1989). Generalized linear models (2nd edn.). London: Chapman and Hall. Google Scholar
  18. Ménard, C. (2004). The economics of hybrid organizations. Journal of Institutional and Theoretical Economics, 160(3), 1–32. CrossRefGoogle Scholar
  19. Michener, R., & Tighe, C. (1992). A Poisson regression model of highway fatalities. American Economic Review, 82(2), 452–456. Google Scholar
  20. Miller, G. J. (2000). Above politics: credible commitment and efficiency in the design of public agencies. Journal of Public Administration Research and Theory, 10(2), 289–328. Google Scholar
  21. Morris, J. C. (2007) Government and market pathologies of privatization: the case of prison privatization. Politics & Policy, 35(2), 318–341. CrossRefGoogle Scholar
  22. Rabe-Hesketh, S., & Everitt, B. S. (2007). A handbook of statistical analyses using Stata (2nd edn.). Boca Raton: Chapman & Hall. Google Scholar
  23. Ring, P. S., & Perry, J. L. (1985). Strategic management in public and private organizations: implications of distinctive contexts and constraints. Academy of Management Review, 30(2), 276–286. CrossRefGoogle Scholar
  24. Williamson, O. E. (1999). Public and private bureaucracies: a transaction cost economics perspective. Journal of Law, Economics and Organization, 15(1), 306–342. CrossRefGoogle Scholar
  25. Winkelmann, R. (2008). Econometric analysis of count data. New York: Springer. Google Scholar
  26. Wooldridge, J. M. (2006). Introductory econometrics: a modern approach. Thomson. Google Scholar
  27. Xiang, L., & Lee, A. H. (2005). Sensitivity of test for overdispersion in Poisson regression. Biometrical Journal, 47(2), 167–176. CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media, LLC 2009

Authors and Affiliations

  • Sandro Cabral
    • 1
  • Sergio G. Lazzarini
    • 2
  • Paulo Furquim de Azevedo
    • 3
  1. 1.Federal University of Bahia (UFBA)SalvadorBrazil
  2. 2.Insper Institute of Education and ResearchSão PauloBrazil
  3. 3.FGVSão PauloBrazil

Personalised recommendations