Cost savings of contracting out refuse collection
AbstractThe article discusses the possible cost savings of contracting out refuse collection in the Netherlands. According to foreign econometric studies, contracting out refuse collection leads to cost savings of approximately 20%. Our findings indicate that similar cost savings apply to the Netherlands. However, different production technologies apply to internal or external refuse collection. The Chow test, which examines whether the estimated coefficients on the explanatory variables are the same, reveals that different cost functions have to be estimated for the sub-samples. We show that the postulated cost savings can even be larger, when taking account of effects of different production technologies. Though significant cost savings exist on contracting out waste collection, households will not experience these cost savings on a one to one basis. Private refuse collection firms must pay VAT while public firms are exempted. At present the Dutch fiscal system hinders a more pronounced role for private refuse collection firms.
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Bibliographic InfoPaper provided by EconWPA in its series Public Economics with number 0409002.
Length: 19 pages
Date of creation: 01 Sep 2004
Date of revision:
Note: Type of Document - pdf; pages: 19
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Refuse collection; cost estimation; Chow stability test; pooling; VAT;
Other versions of this item:
- D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
- H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
- L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-09-05 (All new papers)
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