IDEAS home Printed from https://ideas.repec.org/p/fer/wpaper/113.html
   My bibliography  Save this paper

Public Procurement versus Laissez-Faire: Evidence from Household Waste Collection

Author

Listed:
  • Meriläinen, Jaakko
  • Tukiainen, Janne

Abstract

We document that switching from laissez-faire production to public procurement in residential waste collection in Finland reduces the number of firms active in the local market, but induces a statistically significant and large decrease in unit prices on average. While public procurement, thus, seems to be desirable from the citizens’ perspective, not all municipalities adopt public procurement. We provide descriptive evidence that municipal council composition is associated with the chosen regime. This suggests that local politics may be one obstacle for the efficient provision of local public goods.

Suggested Citation

  • Meriläinen, Jaakko & Tukiainen, Janne, 2018. "Public Procurement versus Laissez-Faire: Evidence from Household Waste Collection," Working Papers 113, VATT Institute for Economic Research.
    • Handle: RePEc:fer:wpaper:113
    as

    Download full text from publisher

    File URL: https://www.doria.fi/handle/10024/166566
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Dubin, Jeffrey A & Navarro, Peter, 1988. "How Markets for Impure Public Goods Organize: The Case of Household Refuse Collection," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 4(2), pages 217-241, Fall.
    2. Germà Bel & Xavier Fageda, 2009. "Factors explaining local privatization: a meta-regression analysis," Public Choice, Springer, vol. 139(1), pages 105-119, April.
    3. Elinder, Mikael & Jordahl, Henrik, 2013. "Political preferences and public sector outsourcing," European Journal of Political Economy, Elsevier, vol. 30(C), pages 43-57.
    4. Joshua D. Angrist & Jörn-Steffen Pischke, 2009. "Mostly Harmless Econometrics: An Empiricist's Companion," Economics Books, Princeton University Press, edition 1, number 8769.
    5. Jaakko Meriläinen & Janne Tukiainen, 2019. "Public Procurement versus Laissez-Faire: Evidence from Household Waste Collection," CESifo Economic Studies, CESifo, vol. 65(4), pages 446-463.
    6. Henry Ohlsson, 2003. "Ownership and Production Costs: Choosing between Public Production and Contracting-Out in the Case of Swedish Refuse Collection," Fiscal Studies, Institute for Fiscal Studies, vol. 24(4), pages 451-476, December.
    7. Oriana Bandiera & Andrea Prat & Tommaso Valletti, 2009. "Active and Passive Waste in Government Spending: Evidence from a Policy Experiment," American Economic Review, American Economic Association, vol. 99(4), pages 1278-1308, September.
    8. Ari Hyytinen & Sofia Lundberg & Otto Toivanen, 2018. "Design of public procurement auctions: evidence from cleaning contracts," RAND Journal of Economics, RAND Corporation, vol. 49(2), pages 398-426, June.
    9. E. Dijkgraaf & R. H. J. M. Gradus & B. Melenberg, 2003. "Contracting out refuse collection," Empirical Economics, Springer, vol. 28(3), pages 553-570, July.
    10. Juan Máñez & Gemma Pérez-lópez & Diego Prior & José luis Zafra-gómez, 2016. "Understanding the Dynamic Effect of Contracting Out on the Delivery of Local Public Services," Regional Studies, Taylor & Francis Journals, vol. 50(12), pages 2069-2080, December.
    11. James Bennett & Manuel Johnson, 1979. "Public versus private provision of collective goods and services: garbage collection revisited," Public Choice, Springer, vol. 34(1), pages 55-63, March.
    12. E. Dijkgraaf & R. Gradus, 2003. "Cost Savings of Contracting Out Refuse Collection," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 30(2), pages 149-161, June.
    13. 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.
    14. Germà Bel & Antonio Miralles, 2003. "Factors Influencing the Privatisation of Urban Solid Waste Collection in Spain," Urban Studies, Urban Studies Journal Limited, vol. 40(7), pages 1323-1334, June.
    15. Edwards, Franklin R & Stevens, Barbara J, 1978. "The Provision of Municipal Sanitation Services by Private Firms: An Empirical Analysis of the Efficiency of Alternative Market Structures and Regulatory Arrangements," Journal of Industrial Economics, Wiley Blackwell, vol. 27(2), pages 133-147, December.
    16. Germà Bel & Xavier Fageda, 2017. "What have we learned from the last three decades of empirical studies on factors driving local privatisation?," Local Government Studies, Taylor & Francis Journals, vol. 43(4), pages 503-511, July.
    17. 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.
    18. Christoffersen, Henrik & Paldam, Martin, 2003. "Markets and Municipalities: A Study of the Behavior of the Danish Municipalities," Public Choice, Springer, vol. 114(1-2), pages 79-102, January.
    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. Niklas Potrafke, 2019. "Does Public Sector Outsourcing Decrease Public Employment? Empirical Evidence from OECD Countries," CESifo Economic Studies, CESifo, vol. 65(4), pages 464-484.
    2. Jaakko Meriläinen & Janne Tukiainen, 2019. "Public Procurement versus Laissez-Faire: Evidence from Household Waste Collection," CESifo Economic Studies, CESifo, vol. 65(4), pages 446-463.
    3. Paul K Gorecki, 2020. "Household Waste Policy in Ireland: Options for Competition, Environment and Regulation," The Economic and Social Review, Economic and Social Studies, vol. 51(2), pages 305-326.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. 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.
    2. Germà Bel & Xavier Fageda & Melania Mur, 2011. "Privatization, cooperation and costs of solid waste services in small towns," IREA Working Papers 201111, University of Barcelona, Research Institute of Applied Economics, revised Jul 2011.
    3. Fusco, Elisa & Allegrini, Veronica, 2020. "The role of spatial interdependence in local government cost efficiency: An application to waste Italian sector," Socio-Economic Planning Sciences, Elsevier, vol. 69(C).
    4. Germà Bel & Xavier Fageda & Melania Mur, 2010. "¿Por qué se privatizan servicios en los municipios (pequeños)? Evidencia empírica sobre residuos sólidos y agua," Hacienda Pública Española / Review of Public Economics, IEF, vol. 192(1), pages 33-58, March.
    5. Juri Demuth & Hans W. Friederiszick & Steffen Reinhold, 2022. "Reverse Privatization as a Reaction to the Competitive Environment: Evidence from Solid Waste Collection in Germany," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 60(2), pages 217-261, March.
    6. Xavier Fageda & Germa Bel, 2008. "Local privatization, intermunicipal cooperation,transaction costs and political interests: Evidence from Spain," IREA Working Papers 200804, University of Barcelona, Research Institute of Applied Economics, revised Apr 2008.
    7. Germà Bel & Xavier Fageda, 2009. "Factors explaining local privatization: a meta-regression analysis," Public Choice, Springer, vol. 139(1), pages 105-119, April.
    8. E. Dijkgraaf & R.H.J.M. Gradus, 2008. "How to Get Increasing Competition in the Dutch Refuse Collection Market?," Springer Books, in: E. Dijkgraaf & R.H.J.M. Gradus (ed.), The Waste Market, chapter 0, pages 101-109, Springer.
    9. Bel, Germà & Fageda, Xavier, 2010. "Empirical analysis of solid management waste costs: Some evidence from Galicia, Spain," Resources, Conservation & Recycling, Elsevier, vol. 54(3), pages 187-193.
    10. Soukopová, Jana & Vaceková, Gabriela & Klimovský, Daniel, 2017. "Local waste management in the Czech Republic: Limits and merits of public-private partnership and contracting out," Utilities Policy, Elsevier, vol. 48(C), pages 201-209.
    11. Jana Soukopová & Vojtìch Ficek, 2014. "Factors Influencing the Selection of Waste Collection Companies by Municipalities – Are Municipal Decision Effective?," MUNI ECON Working Papers 15, Masaryk University, revised Dec 2014.
    12. Suho Bae, 2010. "Public Versus Private Delivery Of Municipal Solid Waste Services: The Case Of North Carolina," Contemporary Economic Policy, Western Economic Association International, vol. 28(3), pages 414-428, July.
    13. Germà Bel & Melania Mur, 2008. "Intermunicipal cooperation and privatization of solid waste services among small municipalities in Spain," IREA Working Papers 200816, University of Barcelona, Research Institute of Applied Economics, revised Dec 2008.
    14. Antonio Massarutto, 2019. "Italian waste in the circular economy: A agenda for industry regulators in Italy," ECONOMIA PUBBLICA, FrancoAngeli Editore, vol. 2019(1), pages 9-48.
    15. Roland Zullo, 2019. "Explaining Privatization Failure: The Vice of Sweet Carrots and Hard Sticks," Review of Radical Political Economics, Union for Radical Political Economics, vol. 51(1), pages 111-128, March.
    16. Bel, Germà & Warner, Mildred, 2008. "Does privatization of solid waste and water services reduce costs? A review of empirical studies," Resources, Conservation & Recycling, Elsevier, vol. 52(12), pages 1337-1348.
    17. Germa Bel & Xavier Fageda, 2008. "Reforming the local public sector: economics and politics in privatization of water and solid waste," Journal of Economic Policy Reform, Taylor and Francis Journals, vol. 11(1), pages 45-65.
    18. Lombrano, Alessandro, 2009. "Cost efficiency in the management of solid urban waste," Resources, Conservation & Recycling, Elsevier, vol. 53(11), pages 601-611.
    19. 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.
    20. Graziano Abrate & Fabrizio Erbetta & Giovanni Fraquelli & Davide Vannoni, 2012. "Size and Density Economies in Refuse Collection," Carlo Alberto Notebooks 274, Collegio Carlo Alberto.

    More about this item

    Keywords

    free markets; waste collection; public procurement; Local public finance and provision of public services; C23; D72; H76; L13; L85; Kunnat ja hyvinvointialueet;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H76 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Other Expenditure Categories
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:fer:wpaper:113. See general information about how to correct material in RePEc.

    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 bibliographic 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Anita Niskanen (email available below). General contact details of provider: https://edirc.repec.org/data/vatttfi.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.