Which of the following programs would NOT be favored by economists Hart, Shleifer, and Vishny (HSV) and why?
A) Public prisons replace private prisons because tight budget constraints reduce the incentive to increase quality.
B) Public prisons replace private prisons because the profit motive increases the incentive to increase quality.
C) Private prisons replace public prisons because the profit motive encourages cost-cutting at the expense of quality.
D) Private prisons replace pubic prisons because slack budget constraints increase the incentive to increase quality.

Question

Quizplus · Accepted Answer

Hart, Shleifer, and Vishny (HSV) argue that private ownership can lead to cost-cutting measures that may compromise quality, which is why they would not favor private prisons replacing public ones if it leads to reduced quality.

Which of the Following Programs Would NOT Be Favored by Economists