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Privatization and competition in the delivery of local services: An empirical examination of the dual market hypothesis

Germà Bel () and Xavier Fageda

No XREAP2008-04, Working Papers from Xarxa de Referència en Economia Aplicada (XREAP)

Abstract: This paper empirically analyses the hypothesis of the existence of a dual market for contracts in local services. Large firms that operate on a national basis control the contracts for delivery in the most populated and/or urban municipalities, whereas small firms that operate at a local level have the contracts in the least populated and/or rural municipalities. The dual market implies the high concentration and dominance of major firms in large municipalities, and local monopolies in the smaller ones. This market structure is harmful to competition for the market as the effective number of competitors is low across all municipalities. Thus, it damages the likelihood of obtaining cost savings from privatization.

Keywords: Competition; Concentration; Local Services; Privatization. (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-mic and nep-ure
Date: 2008-04, Revised 2008-04
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http://www.xreap.cat/RePEc/xrp/pdf/XREAP2008-4.pdf First version, 2008 (application/pdf)
http://www.xreap.cat/RePEc/xrp/pdf/XREAP2008-4.pdf Revised version, 2008 (application/pdf)

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