Importance of Competition None of the cost efficiencies of private or public providers will last in the absence of competition. Private enterprises often provide lower-cost services because competition forces them to keep close watch on their expenditures. Likewise, competition from private providers forces public providers to control their costs. The issue is not public versus private. It is monopoly versus competition.
Competitive markets can lead to efficient operations in both the public and private sector.
Some governments have unfairly tilted the playing field against the private sector by exempting in-house units from the requirement of submitting sealed, blind bids. Several cities have made it a practice to allow in-house units to put together their bids after being shown the best bids from the private sector. In addition to corrupting the competitive process, such an approach is likely significantly to reduce future cost savings from competition. The reason is that, if private firms feel as though they are being used by politicians only to obtain concessions from in-house units, they soon will decide it is not worth the trouble and expense of putting together serious contract bids. The result will be less competition.