Dr Simon Bastow and Professor Gwyn Bevan

This course is available on the CEMS Exchange, Double Master of Public Administration (LSE-Columbia), Double Master of Public Administration (LSE-Sciences Po), Double Master of Public Administration (LSE-University of Toronto), Global MSc in Management, Global MSc in Management (CEMS MIM), Global MSc in Management (MBA Exchange), MBA Exchange, MPA Dual Degree (LSE and Hertie), MPA Dual Degree (LSE and NUS), MPA Dual Degree (LSE and Tokyo), MPA in Data Science for Public Policy, MSc in Management (1 Year Programme), MSc in Social Innovation and Entrepreneurship, Master of Public Administration and Master of Public Policy. This course is available with permission as an outside option to students on other programmes where regulations permit.

The course examines innovations in different models of governance (defined broadly as the overarching mechanisms) that organise the delivery of public services.  We look at variations across three key governance models in particular, ‘hierarchy, markets and networks’ in recent decades, and assess their strengths and limitations.  We examine their application in both developed and developing countries, to a wide range of core public services, including healthcare, education, criminal justice, transport, public utilities, urban regeneration, reducing carbon emissions to ‘net-zero’, and others.



Many public services have seen a broad global shift from traditional hierarchical bureaucracies towards markets and networks.  Many countries have experienced, and will continue to experience, extensive marketisation of public services and we cover key innovations and their impacts. Markets, in particularly privatisation, create high-powered incentives to challenge inertia that can beset the public sector, however marketisation is no panacea: indeed the characteristics of some public services mean that this brings new risks and problems and governments have often struggled in recent decades with managing the consequent market failure.  We look at the use of 'quasi-markets', voucher systems, full-scale privatisations, Private Finance Initiatives (PFIs) and Public-Private Partnerships (PPPs), Payment by Results (PBR) and Social Impact Bonds (SIBs), ‘blended’ models, and assess their impact on public services.  We also look at innovations in networked, polycentric or collaborative forms of governance.



A central theme of the course is the relationship between institutions and innovative mechanisms for change.  Markets and networks offer a wide range of innovative mechanisms, but their success or failure is often determined by the institutional context in which they are implemented.  History matters and outcomes are path dependent with radical changes possible in ‘windows of opportuity’. Looking across different models of governance, the course will consider issues around optimisation of design and integration of models, and the impact of institutional path dependence on success and failure.  We explore how to align new mechanisms for change with existing institutions in complementary ways.



The course draws on a range of disciplines and analytical approaches, including transaction cost economics, political science, institutional economics, and developments in behavioural economics.  These include the economics of identity, ‘reciprocal altruism’ and the power of reputational mechanisms of 'naming and shaming' and 'naming and faming'.  The lectures and seminars are organised to enable you to understand key theory/concepts through illustrative cases and discussion.  The seminars are organised around group-based presentations.

This course is delivered through a combination of lectures and seminars totalling a minimum of 35 hours across Winter Term.

Students will be expected to produce 1 piece of formative coursework in Winter Term - a 750-word essay plan.

Students will be directed to key texts throughout the term.  Course literature draws from public policy and governance, the economics of transaction costs and behavioural economics among other disciplines.  Some indicative readings throughout the course include:

• Hirschman, AO. (1970) Exit, voice, and loyalty: Responses to decline in firms, organizations, and states. London: Harvard University press.
• M Barber. (2015) How to run a government so that citizens benefit and taxpayers don't go crazy, Allen Lane.
• Le Grand, J. (2007) The Other Invisible Hand: Delivering Public Services Through Choice and Competition, Princeton University Press.
• Williamson, OE (1975) Markets and Hierarchies, The Free Press.
• Williamson, OE (1985) The Economic Institutions of Capitalism: Firms, Markets and Relational Contracting, New York, The Free Press.
• North, D. (1990) Institutions, Institutional Change, and Economic Performance. Cambridge, Cambridge University Press.
• G A Akerlof, RE  Kranton, (2010) Identity Economics: How Identities Shape Our Work, Wages, and Well Being. Woodstock: Princeton University Press.
• Oliver, A (ed.) (2013) Behavioural Public Policy, Cambridge: Cambridge University Press.
• Katz, B. & J. Bradley (2013), The Metropolitan Revolution: How Cities and Metros are Fixing our Broken Politics and Fragile Economy (Brookings Institution Press).
• Bowles, S. (2016) The Moral Economy: Why Good Incentives Are No Substitute for Good Citizens. Yale University Press.
• Bevan, G. (2023) How did Britain come to this? A century of systemic failures of governance. LSE Press.

Essay (50%, 3000 words) in the ST.
Presentation (20%) and policy brief (30%) in the WT.

Presentations as a member of a seminar group in the weekly seminars (20%).

A policy brief about a proposed innovation in government, directed at the head of an organisation able to implement or influence government policy. (30%).

A research essay of 3,000 words critically examining governance and innovation in delivery of public services (50%).