Hart, Shleifer, and Vishny (HSV) Argue That Private Prisons Have

question 61

Essay

Hart, Shleifer, and Vishny (HSV) argue that private prisons have strong incentive to cut costs at the expense of quality, and therefore, weak incentive public prisons are better than strong incentive private prisons. Is there a problem with HSV's argument? If so, explain.

Understand the effects of price controls, including price ceilings and price floors, on market equilibrium.

Analyze the impact of quotas and quota rents on markets and prices.

Describe how consumer and producer surpluses are affected by government interventions in markets.

Recognize the role of government interventions, such as licenses and medallions, in regulating markets.

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Definitions:

Normally Distributed

Describes a statistical distribution that is symmetric about the mean, showing that data near the mean are more frequent in occurrence than data far from the mean.

Standard Deviation

A measure of the amount of variance or dispersion of a set of values, indicating how much the values in a dataset deviate from the mean.

Margin of Error

A statistic expressing the amount of random sampling error in a survey's results.

Sample Mean

The average value of a set of observations derived from a sample.