Policy Research

Government and Market Pathologies of Privatization: The Case of Prison Privatization

John C. Morris

Summary

This article argues that the privatization of correctional facilities is best understood as a combination of government failures, market failures, and political incentives. It deploys a case-study approach to examine prison privatization in Mississippi, the article concludes that prison privatization not only fails to correct certain government or market failures, but also creates additional ‘hybrid’ pathologies that combine elements of both government and market failures. This article offers an alternative method of analysis for privatized arrangements by looking at market pathologies that effect the privatization arrangement.

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Policy Implications

This article may be useful in exploring the broader policy implications of prison privatization. With a growing prison population, state governments must assess additional costs and stretch taxpayer dollars or privatize. The Mississippi case study demonstrates the ‘privatization paradox’ (i.e., government must adopt a dual role as an agent of the people and the principal to the private contractor), but also shows how the model requires the private sector to incur costs to assure contract compliance in pursuit of public accountability. The implications of this research suggest that privatization may have unintended consequences that result in government/market failures.