Competition among sub-contractors can be beneficial
Using a free-market approach might be in citzen's interest
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Context
A state can auction or license the services of providing electronic ID to private companies instead of doing on its own.
The Argument
Sub-contracting to private companies might result in cost-savings and benefit to citizens from marketing competition:
The state can define quality requirements and appoint one or more distributors
Citizens can select between several providers on the basis of costs and services provided
Counter arguments
The risks behind a free-market approach are several. As an example:
The private companies in order to offer competitive prices might lower the quality thus comprising also privacy and exposing customer to threats.
A cartel can emerge thus depriving citizens of a real choice.