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Changing prices after the reform of local public services: remunicipalization versus privatization

Author

Listed:
  • Daniel Albalate

    (Universitat de Barcelona)

  • Germà Bel

    (Universitat de Barcelona)

  • Francisco González-Gómez

    (Universidad de Granada)

  • José C. Hernández-Gutiérrez

    (Universidad de Granada)

  • Andrés J. Picazo-Tadeo

    (Universidad de València)

Abstract

Privatization and remunicipalization have been used as alternative options to reform the delivery of local public services; in both cases, mainly because of disappointment with the service performance, although ideological preferences might also play a role. The drivers and effects of water privatization have been widely studied, whereas little empirical evidence is available for remunicipalization, particularly regarding its effects. Using a sample of Spanish municipalities, this paper assesses the change in the price of urban water following remunicipalization as compared to privatization. The main finding is that remunicipalization leads to smaller increases in price; this outcome is, however, due to a few atypical municipalities with abnormally low prices before the policy reform. Once these influential observations are controlled for, whether the reform consists of remunicipalization or privatization makes no difference regarding price changes. It is also found that remunicipalization is much more likely in cities governed by extreme left-wing parties.

Suggested Citation

  • Daniel Albalate & Germà Bel & Francisco González-Gómez & José C. Hernández-Gutiérrez & Andrés J. Picazo-Tadeo, 2024. "Changing prices after the reform of local public services: remunicipalization versus privatization," Journal of Regulatory Economics, Springer, vol. 65(1), pages 1-26, June.
    • Handle: RePEc:kap:regeco:v:65:y:2024:i:1:d:10.1007_s11149-024-09472-7
    DOI: 10.1007/s11149-024-09472-7
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    More about this item

    Keywords

    Local public services; Prices; Privatization; Remunicipalization; Urban water;
    All these keywords.

    JEL classification:

    • D49 - Microeconomics - - Market Structure, Pricing, and Design - - - Other
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
    • L95 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Gas Utilities; Pipelines; Water Utilities

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