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Size and Density Economies in Refuse Collection

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

The focus of the paper is to analyze the costs of solid waste collection by applying a well-behaved multi-product cost function model to a sample of more than 500 Italian municipalities. Beyond shedding light on the presence and on the extent of size (or scale) economies, our aim is to investigate in depth the issue of economies of density, which is still an underexplored topic in the literature. Our cost function specification, by being able to estimate several measures of density economies (such as output density economies, vertical density economies and horizontal density economies), allows to capture the impact of different urbanization models on the costs of refuse collection and disposal. The results of the estimates highlight the presence of output density economies as well as horizontal density economies. Conversely, there is significant and robust evidence of the existence of vertical density diseconomies, which suggests that congestion problems in densely populated councils are severely affecting garbage collection costs. Finally, there is evidence of diseconomies of size, which suggests that aggregating the refusal collection operations of several municipalities would not bring savings in the average costs.

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File URL: http://www.carloalberto.org/assets/working-papers/no.274.pdf
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Paper provided by Collegio Carlo Alberto in its series Carlo Alberto Notebooks with number 274.

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Length: 27 pages
Date of creation: 2012
Date of revision:
Handle: RePEc:cca:wpaper:274
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  1. Torres, Marcelo & Morrison Paul, Catherine J., 2006. "Driving forces for consolidation or fragmentation of the US water utility industry: A cost function approach with endogenous output," Journal of Urban Economics, Elsevier, vol. 59(1), pages 104-120, January.
  2. Dubin, Jeffrey A & Navarro, Peter, 1988. "How Markets for Impure Public Goods Organize: The Case of Household Refuse Collection," Journal of Law, Economics and Organization, Oxford University Press, vol. 4(2), pages 217-41, Fall.
  3. E. Dijkgraaf & R. H. J. M. Gradus & B. Melenberg, 2003. "Contracting out refuse collection," Empirical Economics, Springer, vol. 28(3), pages 553-570, July.
  4. Ohlsson, Henry, 1998. "Ownership and Production Costs - Choosing Between Public Production and Contracting Out," Working Paper Series 1998:6, Uppsala University, Department of Economics.
  5. Carlo Cambini & Massimiliano Piacenza & Davide Vannoni, 2007. "Restructuring Public Transit Systems: Evidence on Cost Properties from Medium and Large-Sized Companies," Review of Industrial Organization, Springer, vol. 31(3), pages 183-203, November.
  6. 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.
  7. Elbert Dijkgraaf & Raymond Gradus, 2004. "Cost savings of contracting out refuse collection," Public Economics 0409002, EconWPA.
  8. 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.
  9. Domberger, S & Meadowcroft, S & Thompson, D J, 1986. "Competitive tendering and efficiency: the case of refuse collection," Fiscal Studies, Institute for Fiscal Studies, vol. 7(4), pages 69-87, November.
  10. 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.
  11. Massimo Filippini & Nevenka Hrovatin & Jelena Zorić, 2008. "Cost efficiency of Slovenian water distribution utilities: an application of stochastic frontier methods," Journal of Productivity Analysis, Springer, vol. 29(2), pages 169-182, April.
  12. Barbara Antonioli & Massimo Filippini, 2002. "Optimal Size in the Waste Collection Sector," Review of Industrial Organization, Springer, vol. 20(3), pages 239-252, May.
  13. Wayne Carroll, 1995. "The Organization and Efficiency of Residential Recycling Services," Eastern Economic Journal, Eastern Economic Association, vol. 21(2), pages 215-225, Spring.
  14. Graziano Abrate & Fabrizio Erbetta & Giovanni Fraquelli & Davide Vannoni, 2014. "The Costs of Disposal and Recycling: An Application to Italian Municipal Solid Waste Services," Regional Studies, Taylor & Francis Journals, vol. 48(5), pages 896-909, May.
  15. Mark J. Roberts, 1986. "Economies of Density and Size in the Production and Delivery of Electric Power," Land Economics, University of Wisconsin Press, vol. 62(4), pages 378-387.
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