SOAS Research Online

Abstract

This article considers the case for public intervention to overcome market failure in the private services sector. It contrasts the performance of consumer services and producer services in the UK over the past couple of decades and considers possible reasons for the disparity. An explanation is offered which focuses on the difficulty of quality monitoring in consumer services where the number of firms supplying some services is likely to be large. Paradoxically, it is argued, the interests of the consumer may be better served by a market structure of larger firms which can brand their quality. Evidence is provided from a NEDO/Gallup Survey that there is untapped potential for higher quality output in this area. A policy response is suggested.