Ownership Incentives Of The Public Service Sector In Transition Economies

Since China's reform, market-oriented reform of private sector has made great achievements. Education, health care and other public service sector reform has lagged behind. Compared to private sector, Public service sector provides the community with public goods or public service, and has completely different characteristics and incentive structures, so the reform of public service sector faces an even more complex issue. Ownership incentive is the key to success in China's three decades of reform. But the privatization in public sector has encountered a lot of problems. This article is from the ownership incentive of public service sector point of view, through the normative theoretical analysis and empirical analysis on ownership arrangements of public service sector, attempts to find the future direction of our public service sector reform.The development of incomplete contract theory provides a powerful analytical tool to investigate the efficiency of public service sector between different ownership structures. Based on incomplete contract theory, by a simple ownership incentive model, the article imply that: the manager has great incentive to make efforts on reducing operating costs under private ownership of public service sector; state-owned public service sector are more likely to achieve effective supply of public services; At the same time, under the state-owned public service system, to increase their discretionary power (or residual rights of control) can effectively motivate the manager of public service sector to reduce costs and improve the quality of public services. At the end of this paper, I choose the reform of China's medical institutions as an example, to prove my conclusion.In my opinion, that in the perspective of public service supply should be concerned about the issue of efficiency. The import of privatization in public sector and market competition, while increasing the discretionary power of state-owned public service sector, must be effective in improving the operation efficiency of public service sector.