Free Markets and Prisons

This whole tookie deal has got me thinkin' about our domestic prisons lately, the relative simplicity of their function, the shortages of space they currently face, the burden they pose to taxpayers, and the monopoly the state has over their utilization.

States typically step in and provide desired goods and services where the market "fails". Law and order is a necessary good that is universally demanded, and it is simply easier for a state to provide this good to the public, paid for by the public tax. And prisons are of course a subset of law and order. But could the government supplement the law and order it provides with a little bit of free market action? This certainly exists to some extent, with private investigators, defense attorneys, and security contractors to name a few. Has the free market for holding inmates in cages ever been tested?

The function of a prison is simple - to remove convicted criminals from a law abiding society, thus removing their danger to that society. You house inmates, who have forfeited their rights to freedom, inside cages and feed them three times a day until their sentence is up.

And clearly this opens up a new private industry in America. There is a demand for more prisons, and were the supply able to meet the demand, more jobs would be created. Efficiency and cost competitiveness of the private sector would lower the cost to the state (who would be the sole customer of the prisons), not to mention more tax revenue would be received from the additional jobs and the corporate profits.

Anyways, what are peoples' feelings on the benefits and costs of this exercise in free market? (in terms of effectiveness, efficiency, eliminating shortages, tax burden, etc) Am I on the ball here, or am I way off, and why?