Provision Mode Construction And Policy Design For Two-tier Public Services

Public funded service providers often offer the low-cost and basic public services relying on government budget to guarantee the basic needs of customers and the fairness of provision for public services.Private service providers offer the differentiated or high-quality services to customers through private capital in a market-oriented context.As an important supplement to the provision of the public services,allowing private service providers to enter the market can effectively solve the problem of insufficient financial resources,and the market competition can also improve the efficiency of service provision.In fact,the one-tier provision mode with a single provider cannot meet the growing and diversified needs of customers due to the government failure or market failure.The public service provision is facing up with the problems of uneven resource allocation,low efficiency,and long waiting time for customers or heavy congestion.As the focus of service provision mode reform,two-tier or multi-provision mode with both public and private providers is booming in practice.Based on the theory of public service provision and the practical problems of over congestion,uneven resource allocation and inefficient provision,with considering the basic functions and requirements of the government on the provision of public service,this paper uses the quantitative research approach such as queuing theory,Matrix Analysis Method and numerical analysis to investigate the provision mode construction and the policy design for basic public services from different perspectives and goals,such as waiting time minimization,revenue maximization and total social cost minimization.First of all,without considering customer balking,subsidy policy or real-time delay information,this paper looks into the long waiting problem of customers in a traditional one-tier and the existing two-tier service provision.Using the quantitative modeling method such as queuing theory to study the relationship between customer selection,service provider pricing and service capability in the process of public service provision.From different objectives or evaluation indicators,this paper systematically discusses whether introducing private provider or differential pricing,that is,how to select the Two-queue Public Service(TQS)and Two-tier Public Service(TTS)modes,and how to price the toll service when the TTS mode is introduced.This study finds that the negative externalities caused by the self-interest choice of heterogeneous customers,who will be influenced by different policies of government and providers,are the main reasons for congestion in public service and even lead to the failure of public service provision.The decisions of price and service capability for the private provider,and the sensitivity characteristics of heterogeneous customers to waiting costs are the main factors in determining the choice of provision modes.When constructing a successful TTS model to provide differentiated services,government need to consider the effectiveness,stability,and reliability conditions for the private provider,the revenue maximization price,and the waiting time minimization price.Secondly,under the situation where the private capital or the service capacity is insufficient,it is necessary to make effective use of the revenue from private provider and the financial funds(external subsidies)from government in a TTS mode.Based on the discussion of price policy,this work further studies the effects of the subsidy to public(TTSF)or private(TTSF)provider with revenue transfer for capacity expansion,and the external subsidy with government funds on a TTS,and analyses the interaction between price and subsidy policies to obtain the applicable conditions for the optimal provision mode and subsidy policy under different subject objectives.It is found that the specific selection of subsidy policy under different objectives depends on the price of private provider(price policy of government)and funds that can be used for subsidies.When the price policy is reasonable or the price of private provider is moderate and the funds available for subsidies are limited,subsidies to the private provider can effectively reduce customer waiting time,increase revenue,and reduce total social cost.Conversely,when the amount of funds available for subsidies is sufficient,subsidizing the public provider can improve the service provision more effectively.In addition,there are moderate rates for both revenue and external subsidies that minimizing the total social cost,which can be used as an important piece of information for government to design the specific subsidy policy.Thirdly,considering balking and customer costs in public and private service channels,this work discusses the impact of the information disclosure policies on public service provision when introducing private funds by using the Matrix Analysis Method.It is indicated that non-real-time information policy is conducive to increasing the market share of the public provider and reducing the loss of customers.Nevertheless,whether to encourage the private provider to disclose its real-time information also depends on different objectives and the price of private provider(government pricing policy).When the price of private provider is relatively low or high,the public and private providers only disclose the expected waiting time(NRI policy)will help reduce customer waiting time and the total social cost;and when the price of private provider is moderate,disclosing more delay information,that is,adopting a mixed information policy(MI-1 policy)can bring more welfares to both customers and society.Finally,taking China's medical service provision as an example,this paper claims the main problems in the existing public provision,and the construction process of the two-tier medical service provider mode by following the specific ideas,methods and results of this paper.Under this practical circumstance,it focuses on discussing how to design the relevant provision policies,that is,acquire the specific conditions applicable to each policy to regulate the provisions of service providers and the behavior of customer choice.This work also makes some suggestions on improving China's medical service provision policy.In summary,this paper concludes that the government should comprehensively consider the interaction between price,service capability and different provision policies from different perspectives,understand the dynamic and specific behavior patterns of customers and service providers via more quantitative analysis,and then select the proper public service provision modes and policies to achieve sustainable provision of public services.