What is Quasi Marketization?

 

Struggling under the complexity and size of the government, and besieged by the threat from neo-liberal ideology, the traditional bureaucratic and centrally controlled public sector model conceded to the wave of new public management reforms that swept across developed countries in 1980s. The forces that broke open national economies, transforming societies and ending universal forms of mass production crashed through public sector. It is not possible for government to deliver standardized and universal service organized through inflexible organizational hierarchies. The wave of reform tends to replace the traditional public service management by alternate service delivery system, reduced the size of the government, transferred power from government to market, reduced market intervention and sought greater involvement from the private and non-governmental sector for the delivery of public services. Quasi marketization evolved with the concept of midway between pure market mechanism and monopolistic state market. The concept of Quasi market is effective for agriculture, health & education sector.

 Quasi market is the public sector institutional structure that is designed to reap the supposed efficiency of free market without losing the equity benefit of traditional system of public administration & financing. This market also tends to establish the competition between public sector & private sector to increase the efficiency of service and production. Quasi-public good is a near public good. Ex: schools and hospital

Difference on pure market, Quasi market and non-market (public sector)

Pure Market	Quasi Market	Non-Market
Legally autonomous	Producers are accredited in accordance with state requirement	Fully controlled by government
Freedom of entry to market	Limited competition through encouragement	No competition (state Monopoly)
Freedom to specify quality of product	Diversity of regulated product (limited specification)	Product is regulated and standardized
Freedom on supply	Some limitation on number and quantity	Regulated numbers
Maximizing profit	Regulated profit	Non-profit
Price reflects cost	Price partially reflects cost	Price do not reflect cost
Consumer choice	Some limitation on choice	Choice restriction
No subsidy: users pay	Partial/limited subsidies	Fully subsidized
Absence of state regulation	Partial regulation	Heavy regulated

 

Quasi-Public goods

a.  Semi non rival- Up to a certain point more visitors using a park, beaches or road does not reduce space available for others, but eventually those places will be considered crowded if open wi-fi network in those places become crowded.

b.  Semi non excludable- It is possible but difficult or costly to exclude the non-paying visitors in park. Ex- fencing a park or beach, charging an entrance fee or building toll roads and congestion charging.

 

Three attributes of Quasi- Market

a.      Choice of Consumers

b.     Competition between service providers

c.      Equality among consumers

Some examples of Quasi- Marketization

• 1.    Voucher System- In this system government provides voucher to parents for education. Parents are free to choose any school for their child (private or public) and school will claim money from the governmental agency by claiming the voucher. Ex: Florida state of USA
• 2.  Open registration system- Parents can register the name of children in any school and the registration fee is filled by government. Ex: New Zealand, Sweden, England.
• 3.   Subsidy management- In Nepal, agriculture company limited produces seeds and fertilizers and distributes through cooperatives or private suppliers to farmers in low rates. The gaps between actual price and revenue generated is subsidized by the government.
• 4.   National health service system-In Japan, government insurance system bears the 70% of medical expense and 30% expense should be managed by patient. Patient is free to visit any hospital (private or public).

The above-mentioned examples fulfill both attributes, choice of consumers and competition between service providers. This system creates the free competition between private and public sector which improve the efficiency of service. Similarly, this system is socialistic which tends to create equality among people with equal distribution of resources.

Criticism on Quasi-Marketization

1.     Cream skimming

This creates discrimination to last consumers in quasi-market. It tends to create inequality among very poor consumers. If government charges basic money for using services, but those who can’t afford basic money are deprived from services which results in discrimination among people. Similarly, during huge demand of service, it is difficult to fulfil the choice of every people which may create discrimination among consumers. If some hospitals or schools are well renowned, then people prefer to go to those service providers which creates congestion on those institution. The introduction of open enrollment on secondary schools in UK after 1988 created a situation that parents were intending to admit their child in popular schools regardless of distance which made popular schools to be oversubscribed. Later, those popular schools started discrimination among parents on the basis of income and family background. 

How to control cream skimming?

a.      Professional Motivation

b.     Information

c.      Random selection of last consumers

d.     Voucher with positive discrimination