|The adoption of market-oriented micro-economic reforms which began in the 1980s has set the pattern for policy reform since. The question for decision makers is now not whether policy outcomes should be achieved through a market, but how to design markets to achieve desired policy outcomes and value-creating investment. |
Market design is an increasingly critical responsibility of government. Increasingly, governments no longer provide essential services directly, but outsource their provision to the private and non-profit sectors. In many cases, this requires new markets for services. These markets do not emerge organically, and so require careful design.
Market design offers scope for innovation on two levels. Firstly, the creation of new markets for public goods and services is in itself innovative, enabling gains from trade in commodities which are genuinely new, like carbon emissions or broadband spectrum, and others not previously traded, like employment services or port capacity. Secondly, good market design provides incentives for innovation to suppliers in these new markets, increasing quality and driving down costs.
The project examines how government can set the ‘rules of the game’ in provision of key services, aligning policy goals with profitable behaviour and stimulating investment in areas of as diverse as health, education, energy, climate change and employment.