In several states, the state government has bid out the right to run the state's prison system to corporations and businesses.

Which of the three strategies of promoting reform is this an example of?

Privatization of government entities to reduce bureaucracy

Explanation:

Many times government entities are not very efficient managers since the government is not interested in making a profit. So government owned companies tend to make little if any profit, and many times they suffer losses.

That is why some governments (both state and federal) decide to sell or privatize some government entities that are not properly or effectively managed and suffer heavy losses.

This is the case with state prisons, where private companies run them at a lower cost than when they were managed by government entities.