This paper presents a new set of institutional indicators that assess how sub-central governments
harness market mechanisms such as tendering, outsourcing, user choice and competition, user fees and
output-related funding when providing public services. Services put under scrutiny comprise primary,
secondary and tertiary education, hospital care, childcare and elderly care, public transport, and waste
collection. Results indicate that governments are often reluctant to apply market mechanisms when
providing public services. “Technical” services such as transport or waste collection are more open to
market mechanisms than “social” services like education or health care. Regulatory innovations such as
tendering, competition or user choice are more advanced than financial innovations like user fees or
output-related funding for service providers.
