Free to Fail

Free to Fail

Creative Destruction Revisited

Hugh van der Mandele and Arjen C. van Witteloostuijn

This challenging book tackles one of the most fundamental questions in economics: Why are commercial organizations more efficient than organizations in the public domain?

Chapter 3: The historic debate

Hugh van der Mandele and Arjen C. van Witteloostuijn

Subjects: business and management, organisation studies, strategic management, economics and finance, industrial organisation


It is widely accepted that private organizations are, on average, more efficient than public organizations producing comparable goods or services under comparable conditions. That is, production occurs within the production possibility frontier envelope. In fact, seeking an adequate answer to the question of why this is the case, is the main purpose of this book. This chapter takes stock of an important historic debate in the economics discipline. However, we cannot do justice to the immense pile of publications dealing with this critical issue. Rather, within the scope of this book, we have to engage in cherry-picking, only discussing those contributions and arguments we believe are essential to provide a balanced enough overview of where this debate has, for the time being, landed. From there, in the next chapters, we hope to offer further impetus to this ongoing debate.

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