EconPapers    
Economics at your fingertips  
 

Public versus private production and economies of scale

Henrik Christoffersen (), Martin Paldam and Allan Würtz

Public Choice, 2007, vol. 130, issue 3, 328 pages

Abstract: The cost of producing the same good often differs substantially for public and private producers. We investigate the effect of organization in a case where the production technology is simple: The cleaning of Danish schools. Three forms of organization are used: Decentral municipal, central municipal or private. For small schools the organizational form has little impact on cost. For larger schools decentral municipal production is the most expensive. On average centralization reduces costs by 5%, while privatization reduces costs by 30%. Similar cost differences are reported in the literature for other cases, but it is a new result that the cost differences are due to economies of scale. Public choice theories predict that cost differences are due to ownership or competition. We find evidence that both theories help explain the cost differences. Copyright Springer Science+Business Media, Inc. 2007

Keywords: Competition; Cost function; Non-parametric regression; Ownership; Scale effects (search for similar items in EconPapers)
Date: 2007
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4) Track citations by RSS feed

Downloads: (external link)
http://hdl.handle.net/10.1007/s11127-006-9086-0 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:pubcho:v:130:y:2007:i:3:p:311-328

Ordering information: This journal article can be ordered from
http://www.springer. ... ce/journal/11127/PS2

DOI: 10.1007/s11127-006-9086-0

Access Statistics for this article

Public Choice is currently edited by WIlliam F. Shughart II

More articles in Public Choice from Springer
Bibliographic data for series maintained by Sonal Shukla ().

 
Page updated 2020-08-08
Handle: RePEc:kap:pubcho:v:130:y:2007:i:3:p:311-328