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Privatization, cooperation and costs of solid waste services in small towns

Germà Bel (), Xavier Fageda and Melania Mur ()
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Melania Mur: University of Zaragoza

No 201111, IREA Working Papers from University of Barcelona, Research Institute of Applied Economics

Abstract: This paper analyzes the cost implications of privatization and cooperation in the provision of solid waste services for a sample of small municipalities. In conducting this empirical analysis, a survey is first designed and administered to municipalities in the Spanish region of Aragon, and then an estimation of the determinants of service costs is undertaken, considering the possible endogeneity of delivery choices. Our findings indicate that cooperation is more effective than privatization in saving costs. Both production forms can enable small municipalities to cut costs by exploiting scale economies. However, the fact that inter-municipal cooperation involves lower transaction costs and is less likely to be affected by competition problems would seem to account for the fact that it is a more effective way of reducing costs.

Keywords: Privatization; cooperation; costs; solid waste. JEL classification:L33; R51; H72. (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-env and nep-reg
Date: 2011-07, Revised 2011-07
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