IDEAS home Printed from https://ideas.repec.org/a/wly/jpamgt/v35y2016i3p533-558.html
   My bibliography  Save this article

Public and Private Production in a Mixed Delivery System: Regulation, Competition and Costs

Author

Listed:
  • Germà Bel
  • Jordi Rosell

Abstract

Academics and policy makers are increasingly shifting the debate concerning the best form of public service provision beyond the traditional dilemma between pure public and pure private delivery modes, because, among other reasons, there is a growing body of evidence that casts doubt on the existence of systematic cost savings from privatization, while any competition seems to be eroded over time. In this paper we compare the relative merits of public and private delivery within a mixed delivery system. We study the role played by ownership, transaction costs, and competition on local public service delivery within the same jurisdiction. Using a stochastic cost frontier, we analyze the public-private urban bus system in the Barcelona Metropolitan Area. Our results suggest that private firms tendering the service have higher delivery costs than those incurred by the public firm, especially when transaction costs are taken into account. Tenders, therefore, do not help to reduce delivery costs. Our results suggest that under a mixed delivery scheme, which permits the co-existence of public and private production, the metropolitan government and the regulator can use private delivery to contain costs in the public firm and, at the same time, benefit from the greater flexibility of private firms for dealing with events not provided for under contract.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Germà Bel & Jordi Rosell, 2016. "Public and Private Production in a Mixed Delivery System: Regulation, Competition and Costs," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 35(3), pages 533-558, June.
  • Handle: RePEc:wly:jpamgt:v:35:y:2016:i:3:p:533-558
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1002/pam.21906
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Cambini Carlo & Filippini Massimo & Piacenza Massimiliano & Vannoni Davide, 2011. "Corporatization and Firm Performance: Evidence from Publicly-Provided Local Utilities," Review of Law & Economics, De Gruyter, vol. 7(1), pages 191-213, July.
    2. Anne Yvrande-Billon, 2006. "The Attribution Process Of Delegation Contracts In The French Urban Public Transport Sector: Why Competitive Tendering Is A Myth," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 77(4), pages 453-478, December.
    3. Andrea Boitani & Marcella Nicolini & Carlo Scarpa, 2013. "Do competition and ownership matter? Evidence from local public transport in Europe," Applied Economics, Taylor & Francis Journals, vol. 45(11), pages 1419-1434, April.
    4. Yves Croissant & William Roy & Joan Canton, 2013. "Reducing urban public transport costs by tendering lots: a panel data estimation," Applied Economics, Taylor & Francis Journals, vol. 45(26), pages 3711-3722, September.
    5. David E. M. Sappington & Joseph E. Stiglitz, 1987. "Privatization, information and incentives," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 6(4), pages 567-585.
    6. Tim Coelli & Antonio Estache & Sergio Perelman & Lourdes Trujillo, 2003. "A Primer on Efficiency Measurement for Utilities and Transport Regulators," World Bank Publications, The World Bank, number 15149, December.
    7. Massimo Filippini & Paola Prioni, 2003. "The influence of ownership on the cost of bus service provision in Switzerland - an empirical illustration," Applied Economics, Taylor & Francis Journals, vol. 35(6), pages 683-690.
    8. Viton, Philip A, 1981. "A Translog Cost Function for Urban Bus Transit," Journal of Industrial Economics, Wiley Blackwell, vol. 29(3), pages 287-304, March.
    9. 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.
    10. David A. Hensher & Ian P. Wallis, 2005. "Competitive Tendering as a Contracting Mechanism for Subsidising Transport: The Bus Experience," Journal of Transport Economics and Policy, University of Bath, vol. 39(3), pages 295-322, September.
    11. Hensher, David A. & Stanley, John, 2008. "Transacting under a performance-based contract: The role of negotiation and competitive tendering," Transportation Research Part A: Policy and Practice, Elsevier, vol. 42(9), pages 1143-1151, November.
    12. Mathisen, Terje Andreas & Solvoll, Gisle, 2008. "Competitive tendering and structural changes: An example from the bus industry," Transport Policy, Elsevier, vol. 15(1), pages 1-11, January.
    13. N.F. Cruz & R.C. Marques & A. Marra & C. Pozzi, 2014. "Local Mixed Companies: The Theory And Practice In An International Perspective," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 85(1), pages 1-9, March.
    14. Elisabetta Ottoz & Graziella Fornengo & Marina Di Giacomo, 2009. "The impact of ownership on the cost of bus service provision: an example from Italy," Applied Economics, Taylor & Francis Journals, vol. 41(3), pages 337-349.
    15. van de Velde, Didier & Beck, Arne, 2010. "Workshop report - Beyond competitive tendering," Research in Transportation Economics, Elsevier, vol. 29(1), pages 145-151.
    16. Arne Beck & Matthias Walter, 2013. "Factors Affecting Tender Prices in Local Bus Transport Evidence from Germany," Journal of Transport Economics and Policy, University of Bath, vol. 47(2), pages 265-278, May.
    17. Savage, Ian, 1993. "Deregulation and Privatization of Britain's Local Bus Industry," Journal of Regulatory Economics, Springer, vol. 5(2), pages 143-158, June.
    18. 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.
    19. Giovanni Fraquelli & Massimiliano Piacenza & Graziano Abrate, 2004. "Regulating Public Transit Networks: How do Urban-Intercity Diversification and Speed-up Measures Affect Firms' Cost Performance?," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 75(2), pages 193-225, June.
    20. Battese, G E & Coelli, T J, 1995. "A Model for Technical Inefficiency Effects in a Stochastic Frontier Production Function for Panel Data," Empirical Economics, Springer, vol. 20(2), pages 325-332.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Matthias Aistleitner & Christian Grimm & Jakob Kapeller, 2018. "Auftragsvergabe, Leistungsqualitaet und Kostenintensitaet im Schienenpersonenverkehr. Eine internationale Perspektive," ICAE Working Papers 86, Johannes Kepler University, Institute for Comprehensive Analysis of the Economy.
    2. repec:eee:trapol:v:60:y:2017:i:c:p:54-62 is not listed on IDEAS
    3. repec:eee:pubeco:v:154:y:2017:i:c:p:95-121 is not listed on IDEAS

    More about this item

    JEL classification:

    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:wly:jpamgt:v:35:y:2016:i:3:p:533-558. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley Content Delivery) or (Christopher F. Baum). General contact details of provider: http://www3.interscience.wiley.com/journal/34787/home .

    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 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.