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Is Private Production of Public Services Cheaper than Public Production? A meta-regression analysis of solid waste and water services

  • Germà Bel

    ()

    (Faculty of Economics, University of Barcelona)

  • Xavier Fageda

    ()

    (Faculty of Economics, University of Barcelona)

  • Mildred E. Warner

    ()

    (Department of City and Regional Planning,Cornell University)

Privatization of local government services is assumed to deliver cost savings but empirical evidence for this from around the world is mixed. We conduct a meta-regression analysis of all econometric studies examining privatization for water distribution and solid waste collection services and find no systematic support for lower costs with private production. Differences in study results are explained by differences in time-period of the analyses, service characteristics, and policy environment. We do not find a genuine empirical effect of cost savings resulting from private production. The results suggest that to ensure cost savings, more attention be given to the cost characteristics of the service, the transaction costs involved, and the policy environment stimulating competition, rather than to the debate over public versus private delivery of these services.

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File URL: http://www.ub.edu/irea/working_papers/2009/200923.pdf
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Paper provided by University of Barcelona, Research Institute of Applied Economics in its series IREA Working Papers with number 200923.

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Length: 33 pages
Date of creation: Oct 2009
Date of revision: Oct 2009
Handle: RePEc:ira:wpaper:200923
Contact details of provider: Postal: Tinent Coronel Valenzuela, Num 1-11 08034 Barcelona
Web page: http://www.ub.edu/irea/

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