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exit, voice and loyalty

  A theory of consumer influence on the quality of public goods developed by Hirschman (1970), who contended that their quality is likely to be lower in monopoly conditions than in situations where consumers have a range of potential suppliers. Where choice is available, consumers can react to an inefficient and/or ineffective service by taking one of the following options:

{img src=show_image.php?name=2022.gif } exit, transferring their custom to an alternative supplier; {img src=show_image.php?name=2022.gif } voice, complaining about the quality of provision and threatening exit if it isn\'t improved; and {img src=show_image.php?name=2022.gif } loyalty, remaining with the current supplier without either voicing complaints or threatening exit.The higher the exit costs (i.e. of switching suppliers) the lower the likely impact of voice, because the supplier can assume loyalty. If exit is impossible, as in a monopoly, then loyalty is virtually guaranteed and voice will have little impact.

Several consequences have been deduced from this argument, and some were put into effect by New Right governments during the 1980s. One is that to obtain efficient and effective service-delivery public sector monopolies should be dismantled, either by their privatization in a way which will create competitive situations or by the creation of quasi-market systems within the sector (as with the British National Health Service: Mohan, 1995; see also Tiebout model). Another is that although individual voice may be ineffective, collective protest may not, since powerful pressure groups could mobilize effective collective voice and/or exit: against this, it is argued that those with least political power to organize are least likely to have effective exit options open to them (e.g. transferring their consumption of such items as education and health care from the public to the private sector). (RJJ)

References Hirschman, A.O. 1970: Exit, voice and loyalty. Cambridge, MA: Harvard University Press. Mohan, J.F. 1995: A national health service? The restructuring of health care in Britain since 1979. London: Macmillan.

Suggested Reading Johnston, R.J. 1992: The internal operations of the state. In P.J. Taylor, ed., The political geography of the twentieth century. London: Belhaven Press. Laver, M. 1997: Private desires, political action: an invitation to the politics of rational choice. London: Sage Publications. Pinch, S. 1997: Worlds of welfare: understanding the changing geographies of social welfare provision. London: Routledge.



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