The Smothering Embrace: Competition in the Implementation of Social Policy

Abstract

One element of recent welfare state reform has been the introduction of market coordination in the implementation of social policy. The authors of this article have conducted a comparative study of social security, health care and housing policy implementation in the Netherlands, focusing on the conditions necessary for an effective mechanism of competition. The most important condition is that clients should be able to switch between providers without difficulty. Evidence shows that the providers in these fields of social policy engage in activities that undermine the potential for future competition. While this is not uncommon in itself, the new markets in social policy appear to be particularly vulnerable to such activities. This can be explained on the basis of two variables: (1) the institutional characteristics of the policy fields as they existed before the introduction of market coordination, and (2) the characteristics of the products that providers distribute. The combination of path dependency and product characteristics strengthens efforts to reduce competition.