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The Strathprints institutional repository is a digital archive of University of Strathclyde research outputs. Strathprints provides access to thousands of Open Access research papers by University of Strathclyde researchers, including those from the School of Psychological Sciences & Health - but also papers by researchers based within the Faculties of Science, Engineering, Humanities & Social Sciences, and from the Strathclyde Business School.

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Competition and costs: evidence from competitive tendering in the Scottish National Health Service

Milne, Robin G. and Wright, Robert E. (2004) Competition and costs: evidence from competitive tendering in the Scottish National Health Service. Scottish Journal of Political Economy, 51 (1). pp. 1-23. ISSN 0036-9292

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Abstract

This paper estimates the impact of competitive tendering on cleaning costs in Scottish National Health Service hospitals. Unlike previous studies, which have relied on cross-sectional data, a five-year balanced panel of 176 hospitals is used to estimate a series of fixed effects regression models. These panel estimates suggest that previous studies have likely over-estimated the cost-savings associated with competitive tendering. The findings also suggest that the lower costs associated with competitive tendering have more to do with auction theory than with any intrinsic efficiency of the private sector.