Scarcity is considered to be one of the basic problems in any economy. Scarcity refers to the gap between citizens‟ needs and the supply of goods. Demand is always bigger than supply. In the public sector, scarcity takes place when claiming that ‟the tax rate cannot be raised‟ or ‟the public sector cannot be expanded‟. From the viewpoint of scarcity, service production should be arranged by the sector that makes it most effective. During the past twenty years the tendency has been toward private sector service production. The reasons for this have been both economical and political