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

Author

Listed:
  • 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)

Abstract

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.

Suggested Citation

  • Germà Bel & Xavier Fageda & Mildred E. Warner, 2009. "Is Private Production of Public Services Cheaper than Public Production? A meta-regression analysis of solid waste and water services," IREA Working Papers 200923, University of Barcelona, Research Institute of Applied Economics, revised Oct 2009.
    • Handle: RePEc:ira:wpaper:200923
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