Who’s to Produce and Who’s to Choose

The question how should the qualifications of students be assessed is one of the most defining and important aspects of any education system.

England, Wales, and Northern Ireland have a unique system of qualifications and assessment distinguished by choice and diversity. While there is much to commend this model, critics have recently questioned whether standards can be upheld under competition between multiple providers. If incentives are not properly aligned to outcomes, competition might lead to a ‘race to the bottom’ instead of promoting quality.

In this monograph, Gabriel Heller Sahlgren applies transaction cost economics and such empirical evidence as is available on the subject to determine which of several different models of provision ought in theory to be most advantageous. A central insight of transaction cost theory is that quality expectations are not met automatically, but require costly efforts of specification and verification. Private provision may be superior to government monopoly, but only as long as private providers cannot shirk on non-contractible dimensions of service.

Private provision could take on different forms. The first main model is characterised by procurement or franchising. The other main model is distinguished by user choice. By carefully comparing these two private models with government provision, this monograph combines a comprehensive treatment of the subject with a discussion of the most policy relevant issues. What emerges is a categorical ranking of the models, elucidated by instructive discussion of how each of the private models could be improved to get the most information value at the lowest cost.