Provision and production of public services by local governments

The distinction between the provision and production of public services lies at the very heart of the privatization of service delivery, while responsibility for these services is retained by the local government. In the case of intermunicipal cooperation, however, the situation may be different, because different forms of cooperation can imply different governance arrangements. Moreover, cooperative provision can be compatible with contracting delivery out to private firms. While this is not often the case with interlocal contracting, it is more frequent when entities other than the cooperating municipalities are in charge of governing the cooperation. In such instances, intermunicipal cooperation and private production are frequently combined. This chapter aims to clarify the distinction between provision and production with an application to the domain of intermunicipal cooperation, and to discuss the challenges posed by different combinations of production forms under intermunicipal cooperation based on the empirical analysis of its effects.