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Neither market nor hierarchy: concurrent sourcing in water public services

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  • Porcher, Simon

Abstract

Analytical frameworks of government service contracting decisions typically focus on the make-or-buy decision. In concepts, governments can either produce the service itself (make) or outsource production (buy). However, governments make and buy the same public services, a practice that is termed concurrent sourcing. Drawing on transaction costs economics and the resource-based view of the firm, this article examines empirically local governments’ propensities to concurrently source public services. Using a unique data set on water public services of more than 4,500 French municipalities for four years—1998, 2001, 2004, and 2008—we find that low transaction hazards, prior contracting experience, and low production capabilities have a positive impact on the level of concurrent sourcing. These findings demonstrate that organizations’ characteristics are a significant factor in sourcing decisions and suggest that capabilities and their interactions with transaction hazards deserve heightened attention in the study of public contracting.

Suggested Citation

  • Porcher, Simon, 2016. "Neither market nor hierarchy: concurrent sourcing in water public services," LSE Research Online Documents on Economics 82990, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:82990
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    File URL: http://eprints.lse.ac.uk/82990/
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    Cited by:

    1. Rosell, Jordi, 2017. "Urban bus contractual regimes in small- and medium-sized municipalities: Competitive tendering or negotiation?," Transport Policy, Elsevier, vol. 60(C), pages 54-62.
    2. Thomas Bolognesi & Géraldine Pflieger, 2021. "In the shadow of sunshine regulation: Explaining disclosure biases," Regulation & Governance, John Wiley & Sons, vol. 15(1), pages 200-225, January.
    3. Simon Porcher, 2019. "Concurrent Sourcing in Local Public Services: Theory, Evidence and Avenues for Future Research," Working Papers halshs-02408513, HAL.
    4. Cassidey, Thomas B. & Freeman, Nickolas & Melouk, Sharif, 2022. "Leveraging concurrent sourcing for risk mitigation and pricing," Omega, Elsevier, vol. 113(C).
    5. Daniel Albalate & Germà Bel & Francisco González-Gómez & José C. Hernández-Gutiérrez & Andrés J. Picazo-Tadeo, 2023. "Remunicipalization of Local Public Services: Policy Drivers and Changing Prices," IREA Working Papers 202319, University of Barcelona, Research Institute of Applied Economics, revised Dec 2023.
    6. Ryan P. Scott & Tyler A. Scott & Robert A. Greer, 2022. "Who owns the pipes? Utility ownership, infrastructure conditions, and methane emissions in United States natural gas distribution," Review of Policy Research, Policy Studies Organization, vol. 39(2), pages 170-198, March.

    More about this item

    Keywords

    water trading contracts; transaction costs; capabilities; concurrent sourcing; contracting;
    All these keywords.

    JEL classification:

    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General

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