Hold-up Problems in Contracting Out Waste Collection Services

Hiroaki Ino, Norimichi Matsueda and Jun'ichi Miki ()
Additional contact information
Jun'ichi Miki: Faculty of Humanities and Social Sciences, Tohoku University of Community Service and Science

No 186, Discussion Paper Series from School of Economics, Kwansei Gakuin University

Abstract: Using the newly-available official data on the disposal of househould solid waste, we estimate that there is generally an inverse relationship between the contracting-out rate and the contract price, but this inverse relationship levels out as the degree of contracting-out increases and the contract price even goes up eventually as the contracting rate approaches 100%. Then, we construct a simple bargaining model between municipal governments and private firms and identify how the bargaining equilibrium differs from an outcome where municipal governments can make take-it-or-leave-it offers to private enterprises. Particularly, we focus on the effects of municipalities' concerns of getting held up by private firms in contract-price negotiations. We also conduct a simple simulation analysis and demonstrate that such concerns can indeed lead to a U-shaped relationship between the contracting-out rate and the contract price across different municipalities.

Keywords: bargaining; contracting-out; contract price; hold-up; waste collection (search for similar items in EconPapers)
JEL-codes: H42 L33 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2019-01, Revised 2022-05
New Economics Papers: this item is included in nep-cta and nep-ind
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://192.218.163.163/RePEc/pdf/kgdp186.pdf Revised version, 2022 (application/pdf)

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:kgu:wpaper:186

Access Statistics for this paper

More papers in Discussion Paper Series from School of Economics, Kwansei Gakuin University Contact information at EDIRC.
Bibliographic data for series maintained by Toshihiro Okada ().