2007 Fiscal Year Final Research Report Summary
A Study on application of Competitive Mechanisms in Public Management
| Project/Area Number |
18530315
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| Research Category |
Grant-in-Aid for Scientific Research (C)
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| Allocation Type | Single-year Grants |
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| Section | 一般 |
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| Research Field |
Business administration
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| Research Institution | Ritsumeikan University |
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Principal Investigator |
KISHI Michio Ritsumeikan University, College of Policy Science, Professor (20330011)
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| Project Period (FY) |
2006 – 2007
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| Keywords | United Kingdom / Public Economics / Transaction Costs / PFI / Value for Money / market testing / Full Costs / Avoidable Costs |
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| Research Abstract |
In this study, concerning application of Competitive Mechanisms in Public Management, analyses of three main topics such as theoretical points of view in economics, current situation, problems, and policy proposals of PFI (Private Finance Initiative), and current situation and problems of market testing are shown.
Regarding theoretical points of view in economics, public goods and services should be supplied by public sector. However, based on transaction cost theory, external supply of public goods and services will be justified by uncertainty, specificity of assets, and market contestability.
Concerning PFI, in calculation of public sector comparator, discount rate is used for life cycle cost to calculate net present value of it. However, application of discount rate is in favor of PFI because capital expenditures are transformed to every year's payments for services for 25-30 years. In addition, it is unclear whether private finance is necessary for successful capital projects, and public finance should be considered for better value for money.
Regarding market testing, it is very important to understand two methods of calculation for in-house costs in the public sector: one is fully allocated costs approach and another is avoidable costs approach. Full costs consist of avoidable costs and unavoidable costs. If a local government needs actual cost savings, avoidable costs approach is better than full cost approach because full costs include unavoidable costs. In addition, in Japan, budget is cash-basis and calculated costs include notional accrual costs such as retirement allowances and depreciations of capital assets. This means that cost savings as a result of comparison of public and private costs will not be realized.
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Research Products
(4 results)
