Cost savings of contracting out refuse collection

Elbert Dijkgraaf and Raymond Gradus ()

Public Economics from University Library of Munich, Germany

Abstract: The article discusses the possible cost savings of contracting out refuse collection in the Netherlands. According to foreign econometric studies, contracting out refuse collection leads to cost savings of approximately 20%. Our findings indicate that similar cost savings apply to the Netherlands. However, different production technologies apply to internal or external refuse collection. The Chow test, which examines whether the estimated coefficients on the explanatory variables are the same, reveals that different cost functions have to be estimated for the sub-samples. We show that the postulated cost savings can even be larger, when taking account of effects of different production technologies. Though significant cost savings exist on contracting out waste collection, households will not experience these cost savings on a one to one basis. Private refuse collection firms must pay VAT while public firms are exempted. At present the Dutch fiscal system hinders a more pronounced role for private refuse collection firms.

Keywords: Refuse collection; cost estimation; Chow stability test; pooling; VAT (search for similar items in EconPapers)
JEL-codes: D21 H21 H42 L33 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2004-09-01
Note: Type of Document - pdf; pages: 19
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

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Related works:
Journal Article: Cost Savings of Contracting Out Refuse Collection (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwppe:0409002

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