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Is Private Delivery of Public Services Really Cheaper? Evidence from Public Road Maintenance in Denmark

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  • Blom-Hansen, Jens

Abstract

It is a general finding that cost savings may be obtained by involving the private sector in public service production. This fact should be of particular interest to countries with large public sectors, such as the Scandinavian countries, where private involvement has a large potential. This paper investigates this potential by focusing on the Danish road sector. 275 municipalities are responsible for the maintenance of approximately 60,000 km of Denmark's 70,000 km public roads. The analysis confirms the international evidence: Involving the private sector also seems to make it possible for the public sector to obtain large cost savings in the Scandinavian countries. Copyright 2003 by Kluwer Academic Publishers

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  • Blom-Hansen, Jens, 2003. "Is Private Delivery of Public Services Really Cheaper? Evidence from Public Road Maintenance in Denmark," Public Choice, Springer, vol. 115(3-4), pages 419-438, June.
    • Handle: RePEc:kap:pubcho:v:115:y:2003:i:3-4:p:419-38
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    References listed on IDEAS

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    1. 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.
    2. 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.
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    Cited by:

    1. Henrik Christoffersen & Martin Paldam, 2004. "Privatization in Denmark, 1980-2002," CESifo Working Paper Series 1127, CESifo.
    2. Jamasb, T. & Söderberg, M., 2009. "Yardstick and Ex-post Regulation by Norm Model: Empirical Equivalence, Pricing Effect, and Performance in Sweeden," Cambridge Working Papers in Economics 0908, Faculty of Economics, University of Cambridge.
    3. María Victoria Ruiz-Mallorquí & Inmaculada Aguiar-Díaz & Beatriz González- López Valcárcel, 2021. "Arrangements with the NHS for providing healthcare services: do they improve financial performance of private for-profit hospitals in Spain?," Health Economics Review, Springer, vol. 11(1), pages 1-12, December.
    4. Andersson, Fredrik & Jordahl, Henrik, 2011. "Outsourcing Public Services: Ownership, Competition, Quality and Contracting," Working Paper Series 874, Research Institute of Industrial Economics.
    5. Henrik Christoffersen & Martin Paldam & Allan Würtz, 2007. "Public versus private production and economies of scale," Public Choice, Springer, vol. 130(3), pages 311-328, March.
    6. Iversen, Evald Bundgaard & Cuskelly, Graham, 2015. "Effects of different policy approaches on sport facility utilisation strategies," Sport Management Review, Elsevier, vol. 18(4), pages 529-541.
    7. Matias Busso & Sebastian Galiani, 2019. "The Causal Effect of Competition on Prices and Quality: Evidence from a Field Experiment," American Economic Journal: Applied Economics, American Economic Association, vol. 11(1), pages 33-56, January.
    8. Fredrik Andersson & Henrik Jordahl & Jens Josephson, 2019. "Outsourcing Public Services: Contractibility, Cost, and Quality," CESifo Economic Studies, CESifo Group, vol. 65(4), pages 349-372.
    9. Shu, Hang & Durango-Cohen, Pablo L., 2021. "On the design of optimal auctions for road concessions: Firm selection, government payments, toll and capacity schedules with imperfect information," Transportation Research Part B: Methodological, Elsevier, vol. 146(C), pages 210-236.
    10. Paul H. Jensen & Robin E. Stonecash, 2004. "The Efficiency of Public Sector Outsourcing Contracts: A Literature Review," Melbourne Institute Working Paper Series wp2004n29, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    11. Alena Podaneva & Pierre Picard, 2023. "Facility Management Services in UK Hospitals: in-house or outsourcing," DEM Discussion Paper Series 23-15, Department of Economics at the University of Luxembourg.
    12. Yarmukhamedov, Sherzod & Smith, Andrew S.J. & Thiebaud, Jean-Christophe, 2020. "Competitive tendering, ownership and cost efficiency in road maintenance services in Sweden: A panel data analysis," Transportation Research Part A: Policy and Practice, Elsevier, vol. 136(C), pages 194-204.
    13. Jean Beuve & Lisa Chever, 2017. "Quality of Outsourced Services, Opportunism and Contract Design," Post-Print hal-02139517, HAL.
    14. Jean Beuve & Lisa Chever, 2017. "Quality of Outsourced Services, Opportunism and Contract Design," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-02139517, HAL.

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