Health Policy 59 (2002) 257–281 The use of contracts in the management of infectious disease related risk in the NHS internal market Pauline Allen a, *, Bronwyn Croxson b , Jennifer A. Roberts a , Kate Archibald a , Shirley Crawshaw a , Lynda Taylor c a Collaboratie Centre for the Economics of Infectious Disease, Health Serices Research Unit, London School of Hygiene and Tropical Medicine, Keppel Street, London WC1E 7HT, UK b Centre for Market and Public Organisation, Department of Economics, Uniersity of Bristol, 12 Priory Road, Bristol BS81TN, UK c Central Public Health Laboratory, 61 Colindale Aenue, London NW 95HT, UK Received 20 November 2000; accepted 21 June 2001 Abstract The paper reports a unique study of contracting for infectious disease control in the English National Health Service internal market. New-institutional economic and socio-legal theories are used to predict that it will not be possible to make contracts for the control of infectious disease which are complete with respect to either the allocation of financial risk or the specification of quality standards. Socio-legal theory predicts that in some circumstances informal relationships (known as networks or relational contracts) can evolve to compensate for some of the deficiencies of incomplete contracts. NHS policy makers are shown to have expected and continue to expect that contracts can be complete. The study comprised five in-depth case studies of contracting in different local areas in England and a national survey of all infection control professionals. The results confirm the theoretical predictions. Con- tracts were not complete, and some of the elements of relational contracts were present. These elements did not, however, fully compensate for the lack of clear accountability caused by contractual incompleteness. © 2002 Elsevier Science Ireland Ltd. All rights reserved. Keywords: Infectious disease; Internal markets; Contracts; New-institutional economics; Socio-legal theory www.elsevier.com/locate/healthpol * Corresponding author. Tel.: +44-207-612-7840; fax: +44-207-612-7843. E-mail address: pauline.allen@lshtm.ac.uk (P. Allen). 0168-8510/02/$ - see front matter © 2002 Elsevier Science Ireland Ltd. All rights reserved. PII:S0168-8510(01)00183-X