Vouchers as Innovation Contracts

Vouchers as Innovation Contracts | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Research Article Vouchers as Innovation Contracts Andreas Bergh This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-8904716/v1 This work is licensed under a CC BY 4.0 License Status: Under Review Version 1 posted 9 You are reading this latest preprint version Abstract This paper models voucher systems for welfare services as contracts through which the public sector pays firms to discover cost-reducing innovations. By allowing providers to retain the difference between the voucher payment and their realized costs, the system creates residual claimancy and incentives for experimentation when innovative effort cannot be directly contracted upon. Using a two-period model, it is shown that if the government lowers vouchers in response to observed cost reductions, a ratchet effect arises that weakens innovation incentives. The government thus faces a fundamental trade-off between capturing immediate fiscal savings for taxpayers and sustaining innovation incentives. This also holds true when allowing for cost-cutting that reduces quality. The theoretical results are applied to the debate on profits and school vouchers in Sweden. Full Text Additional Declarations No competing interests reported. Cite Share Download PDF Status: Under Review Version 1 posted Editorial decision: Revision requested 20 Apr, 2026 Reviews received at journal 18 Apr, 2026 Reviews received at journal 17 Apr, 2026 Reviewers agreed at journal 19 Feb, 2026 Reviewers agreed at journal 18 Feb, 2026 Reviewers invited by journal 18 Feb, 2026 Editor assigned by journal 18 Feb, 2026 Submission checks completed at journal 18 Feb, 2026 First submitted to journal 17 Feb, 2026 You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. We do this by developing innovative software and high quality services for the global research community. Our growing team is made up of researchers and industry professionals working together to solve the most critical problems facing scientific publishing. Also discoverable on Platform About Our Team In Review Editorial Policies Advisory Board Help Center Resources Author Services Accessibility API Access RSS feed Manage Cookie Preferences © Research Square 2026 | ISSN 2693-5015 (online) Privacy Policy Terms of Service Do Not Sell My Personal Information {"props":{"pageProps":{"initialData":{"identity":"rs-8904716","acceptedTermsAndConditions":true,"allowDirectSubmit":false,"archivedVersions":[],"articleType":"Research Article","associatedPublications":[],"authors":[{"id":593828018,"identity":"d5929801-7fee-4086-8e3a-50dacb5f7f79","order_by":0,"name":"Andreas Bergh","email":"data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAZAAAAAyAQMAAABI0h/eAAAABlBMVEX///8AAABVwtN+AAAACXBIWXMAAA7EAAAOxAGVKw4bAAAA50lEQVRIiWNgGAWjYHACAzjJzFAhwU+qljMSkg2kaWFsYyCshX9287YPH2rqGMzZex+/LpxnIWHOwP7wAT4tEneOFc+ccewwg2XPcTPrmdskJCwbeIwN8FpzI8eYmYftAIPBjTQ2Y95tEnUGB3jYJPDpkAdp+fOvjsHg/jOgljkSEgYH2J//wKfFAKSFsY0ZyGBjfszbANLCYIbXXYY30ooZe/sO81j2pLEx8xwDajnMY4zXYXI3kjcz/PhWJ2fOfoz5M09NnYTB8faHH/BaAwU8QAz1NTMx6qGAmSjDR8EoGAWjYOQBABLCQm6iHNAEAAAAAElFTkSuQmCC","orcid":"","institution":"Lund University","correspondingAuthor":true,"prefix":"","firstName":"Andreas","middleName":"","lastName":"Bergh","suffix":""}],"badges":[],"createdAt":"2026-02-17 23:38:14","currentVersionCode":1,"declarations":"","doi":"10.21203/rs.3.rs-8904716/v1","doiUrl":"https://doi.org/10.21203/rs.3.rs-8904716/v1","draftVersion":[],"editorialEvents":[],"editorialNote":"","failedWorkflow":false,"files":[{"id":103096185,"identity":"10ff4ef7-5065-4b30-8f3b-889e64999081","added_by":"auto","created_at":"2026-02-20 18:16:00","extension":"pdf","order_by":1,"title":"","display":"","copyAsset":false,"role":"manuscript-pdf","size":199324,"visible":true,"origin":"","legend":"","description":"","filename":"VouchersandinnovationEoG.pdf","url":"https://assets-eu.researchsquare.com/files/rs-8904716/v1_covered_fdefb8a0-2346-4cb8-950f-add2fd02cad6.pdf"}],"financialInterests":"No competing interests reported.","formattedTitle":"Vouchers as Innovation Contracts","fulltext":[],"fulltextSource":"","fullText":"","funders":[],"hasAdminPriorityOnWorkflow":false,"hasManuscriptDocX":false,"hasOptedInToPreprint":true,"hasPassedJournalQc":"","hasAnyPriority":false,"hideJournal":false,"highlight":"","institution":"","isAcceptedByJournal":false,"isAuthorSuppliedPdf":true,"isDeskRejected":"","isHiddenFromSearch":false,"isInQc":false,"isInWorkflow":false,"isPdf":true,"isPdfUpToDate":true,"isWithdrawnOrRetracted":false,"journal":{"display":true,"email":"[email protected]","identity":"economics-of-governance","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":false,"externalIdentity":"eogo","sideBox":"Learn more about [Economics of Governance](http://link.springer.com/journal/10101)","snPcode":"10101","submissionUrl":"https://submission.nature.com/new-submission/10101/3","title":"Economics of Governance","twitterHandle":"","acdcEnabled":true,"dfaEnabled":true,"editorialSystem":"em","reportingPortfolio":"Springer Hybrid","inReviewEnabled":true,"inReviewRevisionsEnabled":false},"keywords":"","lastPublishedDoi":"10.21203/rs.3.rs-8904716/v1","lastPublishedDoiUrl":"https://doi.org/10.21203/rs.3.rs-8904716/v1","license":{"name":"CC BY 4.0","url":"https://creativecommons.org/licenses/by/4.0/"},"manuscriptAbstract":"This paper models voucher systems for welfare services as contracts through which the public sector pays firms to discover cost-reducing innovations. By allowing providers to retain the difference between the voucher payment and their realized costs, the system creates residual claimancy and incentives for experimentation when innovative effort cannot be directly contracted upon. Using a two-period model, it is shown that if the government lowers vouchers in response to observed cost reductions, a ratchet effect arises that weakens innovation incentives. The government thus faces a fundamental trade-off between capturing immediate fiscal savings for taxpayers and sustaining innovation incentives. This also holds true when allowing for cost-cutting that reduces quality. The theoretical results are applied to the debate on profits and school vouchers in Sweden.","manuscriptTitle":"Vouchers as Innovation Contracts","msid":"","msnumber":"","nonDraftVersions":[{"code":1,"date":"2026-02-20 18:15:53","doi":"10.21203/rs.3.rs-8904716/v1","editorialEvents":[{"type":"communityComments","content":0},{"type":"decision","content":"Revision requested","date":"2026-04-20T14:51:59+00:00","index":"","fulltext":""},{"type":"editorInvitedReview","content":"","date":"2026-04-18T15:48:31+00:00","index":"hide","fulltext":""},{"type":"editorInvitedReview","content":"","date":"2026-04-17T06:55:12+00:00","index":"hide","fulltext":""},{"type":"reviewerAgreed","content":"278019292962927343126096365107779940942","date":"2026-02-19T10:07:19+00:00","index":"hide","fulltext":""},{"type":"reviewerAgreed","content":"218820125893434727586327473904601326667","date":"2026-02-18T10:21:48+00:00","index":"hide","fulltext":""},{"type":"reviewersInvited","content":"","date":"2026-02-18T10:05:30+00:00","index":"","fulltext":""},{"type":"editorAssigned","content":"","date":"2026-02-18T09:21:04+00:00","index":"","fulltext":""},{"type":"checksComplete","content":"","date":"2026-02-18T09:20:50+00:00","index":"","fulltext":""},{"type":"submitted","content":"Economics of Governance","date":"2026-02-17T23:31:37+00:00","index":"","fulltext":""}],"status":"published","journal":{"display":true,"email":"[email protected]","identity":"economics-of-governance","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":false,"externalIdentity":"eogo","sideBox":"Learn more about [Economics of Governance](http://link.springer.com/journal/10101)","snPcode":"10101","submissionUrl":"https://submission.nature.com/new-submission/10101/3","title":"Economics of Governance","twitterHandle":"","acdcEnabled":true,"dfaEnabled":true,"editorialSystem":"em","reportingPortfolio":"Springer Hybrid","inReviewEnabled":true,"inReviewRevisionsEnabled":false}}],"origin":"","ownerIdentity":"47c2f507-1aa5-4264-b1c5-f6406f50c262","owner":[],"postedDate":"February 20th, 2026","published":true,"recentEditorialEvents":[],"rejectedJournal":[],"revision":"","amendment":"","status":"under-review","subjectAreas":[],"tags":[],"updatedAt":"2026-05-08T06:38:39+00:00","versionOfRecord":[],"versionCreatedAt":"2026-02-20 18:15:53","video":"","vorDoi":"","vorDoiUrl":"","workflowStages":[]},"version":"v1","identity":"rs-8904716","journalConfig":"researchsquare"},"__N_SSP":true},"page":"/article/[identity]/[[...version]]","query":{"redirect":"/article/rs-8904716","identity":"rs-8904716","version":["v1"]},"buildId":"XKTyCvWXoU3ODBz1xrDgd","isFallback":false,"isExperimentalCompile":false,"dynamicIds":[84888],"gssp":true,"scriptLoader":[]}