Changing prices after the reform of local public services: remunicipalization versus privatization

Daniel Albalate, Germà Bel, Francisco González-Gómez (), José C. Hernández-Gutiérrez () and Andres Picazo-Tadeo
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Francisco González-Gómez: Universidad de Granada
José C. Hernández-Gutiérrez: Universidad de Granada

Journal of Regulatory Economics, 2024, vol. 65, issue 1, No 1, 26 pages

Abstract: Abstract Privatization and remunicipalization have been used as alternative options to reform the delivery of local public services; in both cases, mainly because of disappointment with the service performance, although ideological preferences might also play a role. The drivers and effects of water privatization have been widely studied, whereas little empirical evidence is available for remunicipalization, particularly regarding its effects. Using a sample of Spanish municipalities, this paper assesses the change in the price of urban water following remunicipalization as compared to privatization. The main finding is that remunicipalization leads to smaller increases in price; this outcome is, however, due to a few atypical municipalities with abnormally low prices before the policy reform. Once these influential observations are controlled for, whether the reform consists of remunicipalization or privatization makes no difference regarding price changes. It is also found that remunicipalization is much more likely in cities governed by extreme left-wing parties.

Keywords: Local public services; Prices; Privatization; Remunicipalization; Urban water (search for similar items in EconPapers)
JEL-codes: D49 G18 L33 L95 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s11149-024-09472-7

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