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Is private production of public services cheaper than public production? A meta-regression analysis of solid waste and water services

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Author Info

  • Germ� Bel

    (Professor, Universitat de Barcelona and Guest Professor, Barcelona Graduate School of Economics)

  • Xavier Fageda

    (Assistant Professor, Universitat de Barcelona)

  • Mildred E. Warner

    (Professor, Cornell University)

Abstract

Privatization of local government services is assumed to deliver cost savings, but empirical evidence for this from around the world is mixed. We conduct a meta-regression analysis of all econometric studies examining privatization of water distribution and solid waste collection services and find no systematic support for lower costs with private production. Differences in study results are explained by differences in time period of the analyses, service characteristics, and policy environment. We do not find a genuine empirical effect of cost savings resulting from private production. The results suggest that to ensure cost savings, more attention be given to the cost characteristics of the service, the transaction costs involved, and the policy environment stimulating competition, rather than to the debate over public versus private delivery of these services. © 2010 by the Association for Public Policy Analysis and Management.

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File URL: http://hdl.handle.net/10.1002/pam.20509
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Bibliographic Info

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

Volume (Year): 29 (2010)
Issue (Month): 3 ()
Pages: 553-577

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Handle: RePEc:wly:jpamgt:v:29:y:2010:i:3:p:553-577

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

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  1. Mildred Warner & Robert Hebdon, 2001. "Local Government Restructuring: Privatization and Its Alternatives," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 20(2), pages 315-336.
  2. John Ashton, 2000. "Cost efficiency in the UK water and sewerage industry," Applied Economics Letters, Taylor & Francis Journals, vol. 7(7), pages 455-458.
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  7. Germà Bel & Xavier Fageda, 2009. "Empirical analysis of solid management waste costs: Some evidence from Galicia, Spain," IREA Working Papers 200907, University of Barcelona, Research Institute of Applied Economics, revised Apr 2009.
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  9. Germa Bel & Xavier Fageda, 2008. "Reforming the local public sector: economics and politics in privatization of water and solid waste," Journal of Economic Policy Reform, Taylor and Francis Journals, vol. 11(1), pages 45-65.
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  18. 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, vol. 26(1), pages 110-126, February.
  19. Nelson, Michael A, 1997. "Municipal Government Approaches to Service Delivery: An Analysis from a Transactions Cost Perspective," Economic Inquiry, Western Economic Association International, vol. 35(1), pages 82-96, January.
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  1. Is the pendulum swinging on outsourcing civic services?
    by ? in Urbanomics on 2011-04-15 01:48:00
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