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Privatization, cooperation and costs of solid waste services in small towns

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Author Info

  • Germà Bel

    ()
    (Faculty of Economics, University of Barcelona)

  • Xavier Fageda

    ()
    (Faculty of Economics, University of Barcelona)

  • Melania Mur

    ()
    (University of Zaragoza)

Abstract

This paper analyzes the cost implications of privatization and cooperation in the provision of solid waste services for a sample of small municipalities. In conducting this empirical analysis, a survey is first designed and administered to municipalities in the Spanish region of Aragon, and then an estimation of the determinants of service costs is undertaken, considering the possible endogeneity of delivery choices. Our findings indicate that cooperation is more effective than privatization in saving costs. Both production forms can enable small municipalities to cut costs by exploiting scale economies. However, the fact that inter-municipal cooperation involves lower transaction costs and is less likely to be affected by competition problems would seem to account for the fact that it is a more effective way of reducing costs.

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File URL: http://www.ub.edu/irea/working_papers/2011/201111.pdf
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Bibliographic Info

Paper provided by University of Barcelona, Research Institute of Applied Economics in its series IREA Working Papers with number 201111.

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Length: 31 pages
Date of creation: Jul 2011
Date of revision: Jul 2011
Handle: RePEc:ira:wpaper:201111

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Postal: Tinent Coronel Valenzuela, Num 1-11 08034 Barcelona
Web page: http://www.ub.edu/irea/
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Related research

Keywords: Privatization; cooperation; costs; solid waste. JEL classification:L33; R51; H72.;

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References

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  1. Germ� Bel & Mildred Warner, 2008. "Challenging issues in local privatization," Environment and Planning C: Government and Policy, Pion Ltd, London, vol. 26(1), pages 104-109, February.
  2. Stevens, Barbara J, 1978. "Scale, Market Structure, and the Cost of Refuse Collection," The Review of Economics and Statistics, MIT Press, vol. 60(3), pages 438-48, August.
  3. Henry Ohlsson, 2003. "Ownership and Production Costs: Choosing between Public Production and Contracting-Out in the Case of Swedish Refuse Collection," Fiscal Studies, Institute for Fiscal Studies, vol. 24(4), pages 451-476, December.
  4. 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.
  5. Scott J. Callan & Janet M. Thomas, 2001. "Economies of Scale and Scope: A Cost Analysis of Municipal Solid Waste Services," Land Economics, University of Wisconsin Press, vol. 77(4), pages 548-560.
  6. E. Dijkgraaf & R. Gradus, 2003. "Cost Savings of Contracting Out Refuse Collection," Empirica, Springer, vol. 30(2), pages 149-161, June.
  7. Jonathan Levin & Steven Tadelis, 2010. "CONTRACTING FOR GOVERNMENT SERVICES: THEORY AND EVIDENCE FROM U.S. CITIES -super-* ," Journal of Industrial Economics, Wiley Blackwell, vol. 58(3), pages 507-541, 09.
  8. 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.
  9. Germa Bel & Anton Costas, 2006. "Do Public Sector Reforms Get Rusty? Local Privatization in Spain," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 9(1), pages 1-24.
  10. Trevor L. Brown & Matthew Potoski, 2003. "Managing contract performance: A transaction costs approach," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 22(2), pages 275-297.
  11. Germa Manel Bel Queralt & Antonio Miralles, 2002. "Factors influencing privatization of urban solid waste collection: some evidence from Spain," Working Papers in Economics 74, Universitat de Barcelona. Espai de Recerca en Economia.
  12. Germà Bel & Xavier Fageda & Mildred E. Warner, 2009. "Is Private Production of Public Services Cheaper than Public Production? A meta-regression analysis of solid waste and water services," IREA Working Papers 200923, University of Barcelona, Research Institute of Applied Economics, revised Oct 2009.
  13. Germà Bel & Xavier Fageda, 2009. "Factors explaining local privatization: a meta-regression analysis," Public Choice, Springer, vol. 139(1), pages 105-119, April.
  14. Germà Bel & Elbert Dijkgraaf & Xavier Fageda & Raymond Gradus, 2008. "Similar problems, different solutions: Comparing refuse collection in the Netherlands and Spain," IREA Working Papers 200815, University of Barcelona, Research Institute of Applied Economics, revised Nov 2008.
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