Quasi-markets are a type of market system that is designed and supervised by a third party, usually the government, to achieve certain social or public goals. Quasi-markets are different from conventional markets, where consumers and providers interact freely based on their preferences and prices. Quasi-markets are also different from bureaucratic delivery systems, where the government directly provides goods and services to the citizens.
Quasi-markets aim to combine the advantages of both markets and bureaucracy, such as efficiency, choice, equity, accessibility and stability. Quasi-markets try to create competition among providers to attract consumers, but they also regulate the quality and quantity of the goods and services offered. Quasi-markets also try to enhance consumer choice and empowerment, but they also subsidize or finance the consumption of certain goods and services that are deemed essential or beneficial for society.
Quasi-markets can be found in various sectors and contexts, such as health care, education, social care, public transport and environmental protection. For example, in the UK, the National Health Service (NHS) introduced an internal market system in 1990, where some entities were given a purchaser status and allocated a budget to buy health care services from other entities that were given a provider status. The providers could be NHS trusts or private or voluntary organizations that competed for contracts with the purchasers. The aim was to improve the efficiency and responsiveness of the health care system while maintaining its universal and free access.
Quasi-markets are not without challenges and limitations. Some of the issues that arise in quasi-markets include:
- Defining and measuring the outcomes and quality of the goods and services provided
- Ensuring accountability and transparency of the providers and purchasers
- Balancing the trade-offs between competition and collaboration among providers
- Preventing or mitigating market failures such as monopoly, information asymmetry, adverse selection and moral hazard
- Aligning the incentives and preferences of the consumers, providers and purchasers
- Dealing with the transaction costs and administrative burdens of creating and managing quasi-markets
Quasi-markets are an interesting and innovative way of organizing public services that attempt to harness the power of markets while avoiding their pitfalls. However, they require careful design, implementation and evaluation to ensure that they serve the public interest effectively and efficiently.