IDEAS home Printed from https://ideas.repec.org/p/mil/wpdepa/2010-33.html
   My bibliography  Save this paper

Dynamics of service provision: service, market and place characteristics

Author

Listed:
  • Amir HEFETZ
  • Mildred E. WARNER

Abstract

Analysis of local government contracting decisions typically focuses on transactions costs related to service characteristics, especially asset specificity and difficulty of contract management. This analysis expands the focus to include market characteristics (competition), citizen characteristics (public interest in the service delivery process), and place characteristics (metro status). Direct surveys of city managers’ rankings of 67 services by transactions costs, competition and citizen interest are combined with data on city managers’ sourcing decisions (direct public, inter-government cooperation, for profit and non profit contracting). Multinomial logit models of service delivery sourcing choice find metro status and competition are key explanatory variables. Inter-governmental cooperation represents an important public market alternative when contract management is difficult and competition is low. For profit contracting is less common when citizen interest is high and competition is low. Differences by metro status show the highest rates of contracting among suburbs.

Suggested Citation

  • Amir HEFETZ & Mildred E. WARNER, 2010. "Dynamics of service provision: service, market and place characteristics," Departmental Working Papers 2010-33, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    • Handle: RePEc:mil:wpdepa:2010-33
    as

    Download full text from publisher

    File URL: http://wp.demm.unimi.it/files/wp/2010/DEMM-2010_033wp.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. 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.
    2. Germà Bel & Xavier Fageda, 2009. "Factors explaining local privatization: a meta-regression analysis," Public Choice, Springer, vol. 139(1), pages 105-119, April.
    3. Elbert Dijkgraaf & Raymond H J M Gradus, 2008. "Institutional Developments in the Dutch Waste-Collection Market," Environment and Planning C, , vol. 26(1), pages 110-126, February.
    4. Williamson, Oliver E, 1999. "Public and Private Bureaucracies: A Transaction Cost Economics Perspective," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 15(1), pages 306-342, April.
    5. 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.
    6. 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.
    7. Paul H. Jensen & Robin E. Stonecash, 2005. "Incentives and the Efficiency of Public Sector‐outsourcing Contracts," Journal of Economic Surveys, Wiley Blackwell, vol. 19(5), pages 767-787, December.
    8. Jeffry M. Netter & William L. Megginson, 2001. "From State to Market: A Survey of Empirical Studies on Privatization," Journal of Economic Literature, American Economic Association, vol. 39(2), pages 321-389, June.
    9. Mildred Warner, 2009. "Civic government or market-based governance? The limits of privatization for rural local governments," Agriculture and Human Values, Springer;The Agriculture, Food, & Human Values Society (AFHVS), vol. 26(1), pages 133-143, March.
    10. Domberger, S & Meadowcroft, S & Thompson, D J, 1986. "Competitive tendering and efficiency: the case of refuse collection," Fiscal Studies, Institute for Fiscal Studies, vol. 7(4), pages 69-87, November.
    11. Chris Webster & Lawrence W.-C. Lai, 2003. "Property Rights, Planning and Markets," Books, Edward Elgar Publishing, number 2625.
    12. Domberger, Simon & Jensen, Paul, 1997. "Contracting Out by the Public Sector: Theory, Evidence, Prospects," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 13(4), pages 67-78, Winter.
    13. Philip Pinch & Alan Patterson, 2000. "Public Sector Restructuring and Regional Development: The Impact of Compulsory Competitive Tendering in the UK," Regional Studies, Taylor & Francis Journals, vol. 34(3), pages 265-275.
    14. Stefan Szymanski, 1996. "The impact of compulsory competitive tendering on refuse collection services," Fiscal Studies, Institute for Fiscal Studies, vol. 17(3), pages 1-19, August.
    15. Ferris, James M & Graddy, Elizabeth, 1994. "Organizational Choices for Public Service Supply," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 10(1), pages 126-141, April.
    16. John Vickers & George Yarrow, 1988. "Privatization: An Economic Analysis," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262720116, December.
    17. 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.
    18. Yolanda Kodrzycki, 1994. "Privatization of local public services: lessons for New England," New England Economic Review, Federal Reserve Bank of Boston, issue May, pages 31-46.
    19. Richard O. Zerbe & Howard E. McCurdy, 1999. "The failure of market failure," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 18(4), pages 558-578.
    20. Jocelyn M. Johnston & Barbara S. Romzek & Curtis H. Wood, 2004. "The Challenges of Contracting and Accountability Across the Federal System: From Ambulances to Space Shuttles," Publius: The Journal of Federalism, CSF Associates Inc., vol. 34(3), pages 155-182, Summer.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bel Germà & Fageda Xavier & E. Mildred, 2014. "Is private production of public services cheaper than public production? A meta-regression analysis of solid waste and water services," Public administration issues, Higher School of Economics, issue 3, pages 103-140.
    2. Germà Bel & Xavier Fageda, 2008. "Privatization and competition in the delivery of local services: An empirical examination of the dual market hypothesis," Working Papers XREAP2008-04, Xarxa de Referència en Economia Aplicada (XREAP), revised Apr 2008.
    3. Amir Hefetz & Mildred E Warner & Eran Vigoda-Gadot, 2012. "Privatization and Intermunicipal Contracting: The US Local Government Experience 1992–2007," Environment and Planning C, , vol. 30(4), pages 675-692, August.
    4. 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.
    5. Juan Carlos Garrido-Rodríguez & Gemma Pérez-López & José Luis Zafra-Gómez & Diego Prior, 2018. "Estimación de la eficiencia a largo plazo en servicios públicos locales mediante fronteras robustas con datos de panel," Hacienda Pública Española / Review of Public Economics, IEF, vol. 226(3), pages 11-36, September.
    6. Fredrik Andersson & Henrik Jordahl & Jens Josephson, 2019. "Outsourcing Public Services: Contractibility, Cost, and Quality," CESifo Economic Studies, CESifo, vol. 65(4), pages 349-372.
    7. E. Dijkgraaf & R. Gradus, 2011. "Efficiency Effects of Privatising Refuse Collection: Be careful and Alternatives present," Tinbergen Institute Discussion Papers 11-156/3, Tinbergen Institute.
    8. Bel, Germà & Warner, Mildred, 2008. "Does privatization of solid waste and water services reduce costs? A review of empirical studies," Resources, Conservation & Recycling, Elsevier, vol. 52(12), pages 1337-1348.
    9. Marius Constantin PROFIROIU & Septimiu Rares SZABO, 2016. "Outsourcing vs decentralisation: A comparative analysis in Central and Eastern Europe," Eco-Economics Review, Ecological University of Bucharest, Economics Faculty and Ecology and Environmental Protection Faculty, vol. 2(2), pages 3-26, December.
    10. 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 paper1212, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    11. Germà Bel & Xavier Fageda & Melania Mur, 2011. "Privatization, cooperation and costs of solid waste services in small towns," IREA Working Papers 201111, University of Barcelona, Research Institute of Applied Economics, revised Jul 2011.
    12. Andersson, Fredrik & Jordahl, Henrik, 2011. "Outsourcing Public Services: Ownership, Competition, Quality and Contracting," Working Paper Series 874, Research Institute of Industrial Economics.
    13. Mildred E. Warner, 2013. "Does local government size matter? Privatization and hybrid systems of local service delivery," Chapters, in: Santiago Lago-Peñas & Jorge Martinez-Vazquez (ed.), The Challenge of Local Government Size, chapter 11, pages 263-288, Edward Elgar Publishing.
    14. 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.
    15. Roland Zullo, 2019. "Explaining Privatization Failure: The Vice of Sweet Carrots and Hard Sticks," Review of Radical Political Economics, Union for Radical Political Economics, vol. 51(1), pages 111-128, March.
    16. 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.
    17. Santiago Lago-Peñas & Jorge Martinez-Vazquez (ed.), 2013. "The Challenge of Local Government Size," Books, Edward Elgar Publishing, number 15294.
    18. Bertacchini, Enrico & Dalle Nogare, Chiara, 2014. "Public provision vs. outsourcing of cultural services: Evidence from Italian cities," European Journal of Political Economy, Elsevier, vol. 35(C), pages 168-182.
    19. Xavier Fageda & Germa Bel, 2008. "Local privatization, intermunicipal cooperation,transaction costs and political interests: Evidence from Spain," IREA Working Papers 200804, University of Barcelona, Research Institute of Applied Economics, revised Apr 2008.
    20. Germà Bel & Xavier Fageda, 2009. "Factors explaining local privatization: a meta-regression analysis," Public Choice, Springer, vol. 139(1), pages 105-119, April.

    More about this item

    Keywords

    Contracting; privatization; transaction costs; competition; citizen interest;
    All these keywords.

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • L3 - Industrial Organization - - Nonprofit Organizations and Public Enterprise

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mil:wpdepa:2010-33. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: DEMM Working Papers (email available below). General contact details of provider: https://edirc.repec.org/data/damilit.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.