Is private production of public services cheaper than public production? A meta-regression analysis of solid waste and water services

By G. Bel, Xavier Fageda, M. Warner. Public Administration Issues, 2010

466 citations recorded by the source corpus.

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 of 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.

Subfields: Economics and Econometrics, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/4695abf9bcb5a8e4be0dad06b5ace567b4e25b71

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Economics and Econometrics

1. M. Warner
2. A. Hefetz
3. G. Bel
4. O. Petersen
5. Ulf Hjelmar
6. K. Vrangbæk
7. Kean Birch
8. Xavier Fageda

In Strategy and Management

1. M. Warner
2. G. Bel
3. A. Hefetz
4. O. Petersen
5. Ulf Hjelmar
6. K. Vrangbæk
7. Matti Siemiatycki
8. Kean Birch

Citations in the corpus

• Contracting or Public Delivery? The Importance of Service, Market and Management Characteristics (2012, background): “Lack of competition undermines the potential for cost savings (Bel and Warner 2008; Bel et al. 2010; Warner and Bel 2008).”
• Neoliberalism and the geographies of marketization (2016, background): “…targets represent attempts by the state to create competition and new incentive structures through ‘internal markets’ that will reward performance rather than job status, encouraging all service providers from managers to frontline staff to ‘up-their-game’ (Bel et al., 2010, 2013; Crouch, 2011).”
• INTER-MUNICIPAL COOPERATION AND COSTS: EXPECTATIONS AND EVIDENCE (2015, background): “Recall that municipalities are free to retain municipal provision or to engage in inter-municipal cooperation, as this remains a municipal responsibility (Bel et al, 2010).”
• Private finance for public goods: social impact bonds (2013, background): “Experience with basic local services contracting has shown lack of cost savings (Bel, Fageda, and Warner 2010), lower rates of consumer satisfaction (Clifton and Diaz-Fuentes 2010), and erosion in service quality, which has led to high rates of contract reversals (Hefetz and Warner 2004, 2007;…”
• Is Contracting out of Public Services still the Great Panacea? A Systematic Review of Studies on Economic and Quality Effects from 2000 to 2014 (2018, background): “…on government agendas and the volume and scope of privately delivered services has been gradually extended, there has not been a corresponding development in systematic assessments of international experience since the turn of the millennium (see, however, Bel et al. 2010 ; Vrangbæk et al. 2015 ).”