Germà Bel

FACTORS EXPLAINING LOCAL PRIVATIZATION: A META-REGRESSION ANALYSIS

Privatization of local public services has been implemented worldwide in the last decades. Why local governments privatize has been the subject of much discussion, and many empirical works have been devoted to analyzing the factors that explain local privatization. Such works have found a great diversity of motivations, and the variation among reported empirical results is large. To investigate this diversity we undertake a meta-regression analysis of the factors explaining the decision to privatize local services. Overall, our results indicate that significant relationships are very dependent upon the characteristics of the studies. Indeed, fiscal stress and political considerations have been found to contribute to local privatization specially in the studies of US cases published in the eighties that consider a broad range of services. Studies that focus on one service capture more accurately the influence of scale economies on privatization. Finally, governments of small towns are more affected by fiscal stress, political considerations and economic efficiency, while ideology seems to play a major role for large cities.

Do Public Sector Reforms Get Rusty? Local Privatization in Spain

Abstract Recent evidence on the savings from private production of local public services has become increasingly ambiguous. Here we specify and estimate a model to explain municipal costs for solid waste collection. As we find no effect of the mode of production on costs, we put forward two hypotheses. First, progressive concentration and decreases in bidding competition may come to outweigh gains from privatization. Second, the threat of privatization may have stimulated public unit managers to search for alternative reforms. The results suggest that both inter‐municipal cooperation and recent privatization are associated with lower costs, while old privatization is not.

Why do local governments privatise public services? A survey of empirical studies

Abstract Many empirical works have been devoted to analysing the factors explaining local privatisation. Overall, most of the empirical analyses have low explanatory power due to the methodological difficulties in capturing the dynamic nature of the privatisation decision. The variables most often considered are those related to fiscal stress and cost reduction and political processes and ideological attitudes. Our review indicates that fiscal stress and pressure from interest group are explanatory factors of local privatisation in those early studies devoted to the US that consider a broad range of services. Furthermore, cost considerations seem to be taken into account by local governments, particularly when scale economies and transaction costs are taken together. Finally, ideological attitudes of policy makers do not seem to influence local service delivery choices in any systematic way.

COMPARISON OF RECENT TOLL ROAD CONCESSION TRANSACTIONS IN THE UNITED STATES AND FRANCE

Recent concessions in France and in the US have resulted in a dramatic difference in the valuation placed on the toll roads; the price paid by the investors in France was twelve times current cash flow whereas investors paid sixty times current cash flow for the U.S. toll roads. In this paper we explore two questions: What accounts for the difference in these multiples, and what are the implications with respect to the public interest. Our analysis illustrates how structural and procedural decisions made by the public owner affect the concession price. Further, the terms of the concession have direct consequences that are enjoyed or borne by the various stakeholders of the toll road.

Factors Influencing the Privatisation of Urban Solid Waste Collection in Spain

This paper analyses some of the organisational aspects of urban solid waste collection. It starts by discussing some of the theoretical issues of contracting out. Then, an explanatory model is specified and estimated on a sample of surveyed municipalities. The purpose is twofold: first, to identify the role of some economic factors when deciding to contract out the service; secondly, to analyse the role of politics in choosing between public production and contracting out. The results show a significant effect of the demand of waste collection on contracting out. There also appears to be a neighbouring effect as municipalities close to others already contracting out are also more prone to do so. Finally, the decisions to contract out seem to have been motivated by pragmatic rather than ideological reasons.

Intermunicipal cooperation, privatization and waste management costs: Evidence from rural municipalities

The aim of this paper is to analyze the effects of intermunicipal cooperation and privatization on the delivery costs of urban solid waste services in rural environments. The results of our empirical analysis, which we conducted among a sample of very small municipalities, indicate that small towns that cooperate incur lower costs for their waste collection service. Cooperation also raises collection frequency and improves the quality of the service in small towns. By contrast, the form of production, whether it is public or private, does not result in systematic differences in costs. Interestingly, the degree of population dispersion, that is, the number of population units within the municipal jurisdiction, has a significant positive relation with service costs. No evidence of scale economies is found because small municipalities have likely exploited them by means of intermunicipal cooperation.

Privatization and Competition in the Delivery of Local Services: An Empirical Examination of the Dual Market Hypothesis

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.

Why do municipalities cooperate to provide local public services? An empirical analysis

Intermunicipal cooperation is being increasingly adopted in various countries as a part of local service delivery reforms. This article draws on survey data from Spains municipalities to examine the reasons underpinning the decisions of local governments to engage in intermunicipal cooperation and privatisation. Our empirical analysis indicates that small municipalities prefer to rely on cooperation for reducing costs, while their larger counterparts prefer to privatise the delivery of services. By cooperating, scale economies can be achieved with lower transaction costs and fewer concerns for competition than is the case via private production.

Reforming the local public sector: economics and politics in privatization of water and solid waste

Several empirical studies have analyzed the factors that influence local privatization. We examine the influence of transaction costs and political factors on local governments’ choices through new variables. We consider two relevant services accounting for different amounts of transaction costs: water and solid waste delivery. Our results show that privatization is less common for water, which has higher transaction costs. Furthermore, we find that municipalities with a conservative ruling party privatize more often regardless of the ideological orientation of the constituency. Finally, we find that intermunicipal cooperation may be a suitable organizational form for some municipalities.

Partial Privatisation in Local Services Delivery: An Empirical Analysis of the Choice of Mixed Firms

Abstract Mixed public–private firms are increasingly used in several European countries. This paper makes use of survey data from Spanish municipalities to examine the motivations of local governments for engaging in partial privatisation of local service delivery of water distribution and solid waste collection. The empirical analysis indicates that mixed firms emerge as a pragmatic middle way between purely public and purely private production. Indeed, local governments make use of mixed firms when cost considerations, financial constraints and private interests exert contradictory pressures. Political and ideological factors play no significant role in that decision.