MG4E5      Half Unit
Governance, Markets and Competition in the Delivery of Public Services

This information is for the 2017/18 session.

Teacher responsible

Dr Simon Bastow and Prof Richard Bevan


This course is available on the CEMS Exchange, Global MSc in Management, Global MSc in Management (CEMS MIM), Global MSc in Management (MBA Exchange), MBA Exchange, MPA Dual Degree (LSE and Columbia), MPA Dual Degree (LSE and Hertie), MPA Dual Degree (LSE and NUS), MPA Dual Degree (LSE and Sciences Po), MPA Dual Degree (LSE and Tokyo), MPA in European Policy-Making, MPA in International Development, MPA in Public Policy and Management, MPA in Public and Economic Policy, MPA in Public and Social Policy, MPA in Social Impact, MSc in Management (1 Year Programme) and Master of Public Administration. This course is available with permission as an outside option to students on other programmes where regulations permit.

Priority will be given to students from the Department of Management's MSc programmes for any outside option spaces.


Students must have previously studied microeconomics.

Course content

The course examines competing models of governance in policy and delivery of public services.  It looks in particular at the comparative strengths and limitations of three governance models - hierarchies, markets and networks - across different public services, with reference to developed and developing countries.

Strong emphasis is given to the growth and innovation in market and competition mechanisms in the public sector in recent decades: for example, the use of quasi-markets, vouchers, privatisation, Private Finance Initiatives (PFIs) and Public-Privat Partnerships (PPPs), payment by results (PBR); in different public services (hospitals, health insurers, criminal justice, schools, universities and public utilities such as water) to examine their efficacy and impact.  The course will also look at networked or co-operative forms of delivery of public services, particularly in response to market failure and emergence of new digital paradigms.

Looking across these different models of governance, the course will consider issues around optimisation of design and integration of models.  We will assess strengths and limitations against competing objectives of efficacy, cost control, equity, accountability and quality.  The course draws on a range of analytical approaches to do so, including principal/agent problems, the economics of transaction costs and behavioural economics.


15 hours of lectures and 15 hours of seminars in the LT.

Formative coursework

Students will be expected to produce 1 piece of coursework in the LT.

A detailed essay plan of two pages with introduction, one key paragraph and conclusion written in full in preparation for the summative essay.

Indicative reading

Students will be directed to key texts throughout the term.  Course literature draws from public policy and governance, the ecomonics of transaction costs and behavioural economics among other disciplines.  Some indicative readings throughout the course include:

- AO Hirschman. Exit, voice, and loyalty: Responses to decline in firms, organizations, and states. London: Harvard university press, 1970

- O E Williamson, Markets and Hierarchies, The Free Press, 1975

- O E Williamson, The Economic Institutions of Capitalism: Firms, Markets and Relational Contracting, New York, The Free Press, 1985

- G Roland, Privatization: Successes and Failures, Columbia University Press, 2013

-  J Le Grand, The Other Invisible Hand: Delivering Public Services Through Choice and Competition, Princeton University Press, 2007;

- R H Thaler and C R Sunstein, Nudge, Penguin, 2009

- Oliver A (ed) Behavioural Public Policy, Cambridge: Cambridge University Press, 2013

- G A Akerlof, RE Kranton, Identity Economics: How Identities Shape Our Work Wages and Well Being, Woodstock: Princeton University Press, 2010

- M Barber, How to run a government so that citizens benefit and taxpayers don't go crazy, Allen Lane, 2015 

- R Rhodes, The New Governance: Governing without Government, Political Studies 44 (4), 1996

- G F Thompson, Between Hierarchies and Markets: The Logic and Limits of Network Forms of Organization, Oxford University Press, 2003

- W W Powell, Neither market nor hierarchy: Network forms of organization, Research in Organizational Behavior 12 (pp 295-336), 1990



Essay (50%, 3000 words) in the ST.
Presentation (20%) and policy memo (30%) in the LT.

An essay of 3,000 words critically examining governance of a public service (preferably) in the student’s own country (50%).

Presentations as a member of a seminar group in the weekly seminars (20%).

A policy brief for a minister, either for proposed reform or analysis of an existing market-based or network-based model of governance in action (30%).

Key facts

Department: Management

Total students 2016/17: 32

Average class size 2016/17: 16

Controlled access 2016/17: Yes

Lecture capture used 2016/17: Yes (LT)

Value: Half Unit

Guidelines for interpreting course guide information

Personal development skills

  • Leadership
  • Self-management
  • Team working
  • Problem solving
  • Communication
  • Specialist skills