Entrepreneurship in Quasi-Markets: An Institutional Analysis

To bolster entrepreneurship and innovation in welfare service provision, numerous countries have established quasi-markets. Yet, the actual benefits from these reforms have often been modest. We posit that quasi-markets can realize their potential only within the appropriate institutional framework, which highlights the need for studies in the field of institutional economics that identify how best to regulate quasi-markets so that they deliver in line with these expectations. While competition and the presence of for-profit actors are necessary conditions for quasi-market improvements, they alone are insufficient. We illustrate this point by showing how the three leading entrepreneurship conceptions—Knightian, Kirznerian, and Schumpeterian—risk falling short of their potential in typical quasi-market setups. Most importantly, our analysis identifies the necessity for a set of complementary institutions that are epistemic in nature. Such reforms should help bolster (Knightian, Kirznerian, and Schumpeterian) quasi-market entrepreneurship and help users construct the requisite knowledge to make informed choices.