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Privatization and competition in the delivery of local services: An empirical examination of the dual market hypothesis

Author

Listed:
  • Germà Bel

    (PPRE-IREA, Universitat de Barcelona (SPAIN).)

  • Xavier Fageda

    (PPRE-IREA, Universitat de Barcelona (SPAIN).)

Abstract

This paper empirically analyses the hypothesis of the existence of a dual market for contracts in local services. Large firms that operate on a national basis control the contracts for delivery in the most populated and/or urban municipalities, whereas small firms that operate at a local level have the contracts in the least populated and/or rural municipalities. The dual market implies the high concentration and dominance of major firms in large municipalities, and local monopolies in the smaller ones. This market structure is harmful to competition for the market as the effective number of competitors is low across all municipalities. Thus, it damages the likelihood of obtaining cost savings from privatization.

Suggested Citation

  • Germà Bel & Xavier Fageda, 2008. "Privatization and competition in the delivery of local services: An empirical examination of the dual market hypothesis," Working Papers XREAP2008-04, Xarxa de Referència en Economia Aplicada (XREAP), revised Apr 2008.
    • Handle: RePEc:xrp:wpaper:xreap2008-04
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    References listed on IDEAS

    as
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    Keywords

    Competition; Concentration; Local Services; Privatization.;
    All these keywords.

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