Privatizing prisons generally reduce the financial incentive to incarcerate more people.

In non-privatized states, you generally have a prison guard union. The prison guard union lobbies for more prisoners and gets more money. Simple as that. A non-monopolistic prison corporation spends their own money lobbying, and all the other prison corporations get to reap the benefits. Classic collective action problem.

http://www.volokh.com/2013/01/10/the-effect-of-privatization...

http://www.volokh.com/2013/01/11/the-effect-of-privatization...