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Local Government Restructuring: Privatization and Its Alternatives

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  • Mildred Warner

    (Department of City and Regional Planning, Cornell University)

  • Robert Hebdon

    (McGill University)

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    Abstract

    Local government restructuring should no longer be viewed as a simple dichotomy between private and public provision. A 1997 survey of chief elected township and county officials in New York shows that local governments use both private and public sector mechanisms to structure the market, create competition, and attain economies of scale. In addition to privatization and inter-municipal cooperation, two alternative forms of service delivery not previously researched-reverse privatization and governmental entrepreneurship-are analyzed here. Logistic regression on the 201 responding governments differentiates the decision to restructure from the level and complexity of restructuring. Results confirm that local governments are guided primarily by pragmatic concerns with information, monitoring, and service quality. Political factors are not significant in the restructuring process and unionization is only significant in cases of simple restructuring (privatization or cooperation used alone). Fiscal stress is not a primary motivator, but debt limits are associated with more complex forms of restructuring. Restructuring service delivery requires capacity to take risks and is more common among experienced local officials in larger, higher-income communities. Restructuring should be viewed as a complex, pragmatic process where governments combine public and private provision with an active role as service provider and market player. © 2001 by the Association for Public Policy Analysis and Management.

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    File URL: http://hdl.handle.net/10.1002/pam.2027
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    Bibliographic Info

    Article provided by John Wiley & Sons, Ltd. in its journal Journal of Policy Analysis and Management.

    Volume (Year): 20 (2001)
    Issue (Month): 2 ()
    Pages: 315-336

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    Handle: RePEc:wly:jpamgt:v:20:y:2001:i:2:p:315-336

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    Web page: http://www3.interscience.wiley.com/journal/34787/home

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    1. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 64, pages 416.
    2. Yolanda K. Kodrzycki, 1998. "Fiscal pressures and the privatization of local services," New England Economic Review, Federal Reserve Bank of Boston, Federal Reserve Bank of Boston, issue Jan, pages 39-50.
    3. Robert McGuire & Robert Ohsfeldt & T. Cott, 1987. "The determinants of the choice between public and private production of a publicly funded service," Public Choice, Springer, Springer, vol. 54(3), pages 211-230, August.
    4. Marmolo, Elisabetta, 1999. "A constitutional theory of public goods," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 38(1), pages 27-42, January.
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    Cited by:
    1. Germà Bel & Xavier Fageda & Melania Mur, 2011. "Privatization, cooperation and costs of solid waste services in small towns," IREA Working Papers, University of Barcelona, Research Institute of Applied Economics 201111, University of Barcelona, Research Institute of Applied Economics, revised Jul 2011.
    2. Germà Bel & Xavier Fageda, 2006. "Factors explaining local privatization: A meta-regression analysis," Working Papers, Xarxa de Referència en Economia Aplicada (XREAP) CREAP2006-03, Xarxa de Referència en Economia Aplicada (XREAP), revised Oct 2006.
    3. Germa Bel & Anton Costas, 2006. "Do Public Sector Reforms Get Rusty? Local Privatization in Spain," Journal of Economic Policy Reform, Taylor & Francis Journals, Taylor & Francis Journals, vol. 9(1), pages 1-24.
    4. Mildred E. Warner, 2012. "Does Local Government Size Matter? Privatization and Hybrid Systems of Local Service Delivery," International Center for Public Policy Working Paper Series, at AYSPS, GSU, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University paper1212, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    5. Anders Sundell & Victor Lapuente, 2012. "Adam Smith or Machiavelli? Political incentives for contracting out local public services," Public Choice, Springer, Springer, vol. 153(3), pages 469-485, December.
    6. Jonathan Levin & Steven Tadelis, 2007. "Contracting for Government Services: Theory and Evidence from U.S. Cities," NBER Working Papers 13350, National Bureau of Economic Research, Inc.
    7. Fumitoshi Mizutani & Shuji Uranishi, 2010. "Determinants of privatization of public corporations: evidence from the Japanese experience," Empirical Economics, Springer, Springer, vol. 39(2), pages 515-535, October.
    8. Elbert Dijkgraaf & Raymond H J M Gradus, 2008. "Institutional developments in the Dutch waste-collection market," Environment and Planning C: Government and Policy, Pion Ltd, London, Pion Ltd, London, vol. 26(1), pages 110-126, February.
    9. Daniel Albalate & Germà Bel & R. Richard Geddes, 2012. "“The determinants of contractual choice for private involvement in infrastructure projects in the United States”," IREA Working Papers, University of Barcelona, Research Institute of Applied Economics 201220, University of Barcelona, Research Institute of Applied Economics, revised Dec 2012.
    10. Daniel Albalate & Germà Bel & Xavier Fageda, 2012. "“Beyond pure public and pure private management models: Mixed firms in the European Airport Industry”," IREA Working Papers, University of Barcelona, Research Institute of Applied Economics 201221, University of Barcelona, Research Institute of Applied Economics, revised Dec 2012.
    11. Germa Bel & Anton Costas, 2004. "Do public sector reforms get rusty? An empirical analysis on privatization of solid waste collection," Public Economics, EconWPA 0409014, EconWPA.
    12. Maddalena SORRENTINO & Massimo SIMONETTA Author-X-Name-First: Massimo, 2013. "Delivering ICT Shared Services to Local Governments:A new species of public enterprise?," CIRIEC Working Papers, CIRIEC - Université de Liège 1309, CIRIEC - Université de Liège.
    13. Germ� Bel & Xavier Fageda & Mildred E. Warner, 2010. "Is private production of public services cheaper than public production? A meta-regression analysis of solid waste and water services," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 29(3), pages 553-577.
    14. Xavier Fageda & Germa Bel, 2008. "Local privatization, intermunicipal cooperation,transaction costs and political interests: Evidence from Spain," IREA Working Papers, University of Barcelona, Research Institute of Applied Economics 200804, University of Barcelona, Research Institute of Applied Economics, revised Apr 2008.
    15. Xavier Fageda & Germa Bel, 2008. "Choosing hybrid organizations for local servicesdelivery: An empirical analysis of partial privatization," IREA Working Papers, University of Barcelona, Research Institute of Applied Economics 200803, University of Barcelona, Research Institute of Applied Economics, revised Apr 2008.
    16. Germà Bel & Xavier Fageda & Melania Mur, 2009. "¿Por qué se privatizan servicios en los municipios (pequeños)?Evidencia empírica sobre residuos sólidos y agua," IREA Working Papers, University of Barcelona, Research Institute of Applied Economics 200908, University of Barcelona, Research Institute of Applied Economics, revised Apr 2009.
    17. Jorge Guardiola & Francisco González-Gómez & Miguel A. García-Rubio, 2008. "Is the time dimension really important in research into contracting out?," FEG Working Paper Series, Faculty of Economics and Business (University of Granada) 08/02, Faculty of Economics and Business (University of Granada).
    18. Trevor L. Brown & Matthew Potoski, 2003. "Managing contract performance: A transaction costs approach," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 22(2), pages 275-297.

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