Is Private Production of Public Services Cheaper Than Public Production? A Meta-Regression Analysis of Solid Waste and Water Services'

Journal of Policy Analysis and Management (Impact Factor: 0.93). 06/2010; 29(3):553-577. DOI: 10.2307/40802088
Source: RePEc


Privatization of local government services is assumed to deliver cost savings, but empirical evidence for this from around the world is mixed. We conduct a meta-regression analysis of all econometric studies examining privatization of water distribution and solid waste collection services and find no systematic support for lower costs with private production. Differences in study results are explained by differences in time period of the analyses, service characteristics, and policy environment. We do not find a genuine empirical effect of cost savings resulting from private production. The results suggest that to ensure cost savings, more attention be given to the cost characteristics of the service, the transaction costs involved, and the policy environment stimulating competition, rather than to the debate over public versus private delivery of these services. © 2010 by the Association for Public Policy Analysis and Management.

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Available from: Germa Bel
    • "It is clear, however, that the institutional setting in which delegation takes place is vital to delegation's success or failure. These findings are in keeping with earlier, though still scarce, overview studies and meta analyses (Bel, Fageda, and Warner 2010; Dan 2014; Hodge 2000; Letza, Smallman, and Sun 2004; Pollitt and Dan 2013). "

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    • "Another example is Domberger & Jensen (1997), who report that the most frequent saving in costs is between 10 and 20 %. On the contrary, Bel et al. (2010) conduct a meta-regression analysis of 27 econometric studies from 1965 to 2010 examining privatization for water distribution and solid waste collection services and find no systematic support for lower costs with private production. "
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