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The Costs of Disposal and Recycling. An Application to Italian Municipal Solid Waste Services

  • Graziano Abrate
  • Fabrizio Erbetta
  • Giovanni Fraquelli
  • Davide Vannoni

The paper investigates the costs of waste disposal and recycling services by using a well-behaved Composite cost function model. Our estimates on a unique sample of more than 500 Italian municipalities highlight that the refuse collection technology exhibits constant returns to scale as well as scope economies between disposal and recycling. As far as the size of the municipality increases, scope economies rise up to 14%, but they are accompanied with overall diseconomies of scale. Our findings suggest that, on the one hand, joint management of disposal and recycling should be encouraged, and, on the other hand, that strategies aimed at increasing the share of waste sent for recycling would not imply a considerable increase in total costs.

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Paper provided by Collegio Carlo Alberto in its series Carlo Alberto Notebooks with number 232.

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Length: 25 pages
Date of creation: 2011
Date of revision:
Handle: RePEc:cca:wpaper:232
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  1. Piacenza, Massimiliano & Vannoni, Davide, 2004. "Choosing among alternative cost function specifications: an application to Italian multi-utilities," Economics Letters, Elsevier, vol. 82(3), pages 415-422, March.
  2. Wayne Carroll, 1995. "The Organization and Efficiency of Residential Recycling Services," Eastern Economic Journal, Eastern Economic Association, vol. 21(2), pages 215-225, Spring.
  3. Ohlsson, H., 1995. "Ownership and Input Prices a Comparison of Public and Private Entreprises," Papers 1995-08, Uppsala - Working Paper Series.
  4. Baumol, William J, 1982. "Contestable Markets: An Uprising in the Theory of Industry Structure," American Economic Review, American Economic Association, vol. 72(1), pages 1-15, March.
  5. Scott J. Callan & Janet M. Thomas, 2001. "Economies of Scale and Scope: A Cost Analysis of Municipal Solid Waste Services," Land Economics, University of Wisconsin Press, vol. 77(4), pages 548-560.
  6. Ohlsson, Henry, 1998. "Ownership and Production Costs - Choosing Between Public Production and Contracting Out," Working Paper Series 1998:6, Uppsala University, Department of Economics.
  7. Germ� Bel & Xavier Fageda & Mildred E. Warner, 2010. "Is private production of public services cheaper than public production? A meta-regression analysis of solid waste and water services," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 29(3), pages 553-577.
  8. Eoin Reeves & Michael Barrow, 2000. "The Impact of Contracting Out on the Costs of Refuse Collection Services - The Case of Ireland," The Economic and Social Review, Economic and Social Studies, vol. 31(2), pages 129-150.
  9. Piacenza, Massimiliano & Turati, Gilberto & Vannoni, Davide, 2010. "Restructuring hospital industry to control public health care expenditure: The role of input substitutability," Economic Modelling, Elsevier, vol. 27(4), pages 881-890, July.
  10. Barbara Antonioli & Massimo Filippini, 2002. "Optimal Size in the Waste Collection Sector," Review of Industrial Organization, Springer, vol. 20(3), pages 239-252, May.
  11. Stevens, Barbara J, 1978. "Scale, Market Structure, and the Cost of Refuse Collection," The Review of Economics and Statistics, MIT Press, vol. 60(3), pages 438-48, August.
  12. 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.
  13. Thomas C. Kinnaman, 2006. "Policy Watch: Examining the Justification for Residential Recycling," Journal of Economic Perspectives, American Economic Association, vol. 20(4), pages 219-232, Fall.
  14. E. Dijkgraaf & R. Gradus, 2003. "Cost Savings of Contracting Out Refuse Collection," Empirica, Springer, vol. 30(2), pages 149-161, June.
  15. Pulley, Lawrence B & Braunstein, Yale M, 1992. "A Composite Cost Function for Multiproduct Firms with an Application to Economies of Scope in Banking," The Review of Economics and Statistics, MIT Press, vol. 74(2), pages 221-30, May.
  16. Germa Bel & Anton Costas, 2006. "Do Public Sector Reforms Get Rusty? Local Privatization in Spain," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 9(1), pages 1-24.
  17. McElroy, Marjorie B., 1977. "Goodness of fit for seemingly unrelated regressions : Glahn's R2y.x and Hooper's r2," Journal of Econometrics, Elsevier, vol. 6(3), pages 381-387, November.
  18. Vuong, Quang H, 1989. "Likelihood Ratio Tests for Model Selection and Non-nested Hypotheses," Econometrica, Econometric Society, vol. 57(2), pages 307-33, March.
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