COMPETITION OR MONOPOLY? COMPARING PRIVATIZATION OF LOCAL PUBLIC SERVICES IN THE US AND SPAIN

Differences in national traditions of public intervention, institutional arrangements and public service markets make local public services an area of great diversity. In this paper we undertake a comparative study of how local governments arrange for delivery of water and waste services in the US and Spain. We find levels of privatization are higher in Spain than in the US. We review organizational reform in the two contexts and compare service delivery data using national surveys from each country. We find lower and less stable privatization in the US stems in part from adherence to public choice emphasis on the benefits of market competition over public monopoly. By contrast, Spanish municipalities reflect an industrial organization approach, and create hybrid public/private firms which benefit from both market engagement and economies of scale available under monopoly production. We conclude that managing monopoly may be more important than competition in local service delivery.     

PRAGMATIC MUNICIPALISM: LOCAL GOVERNMENT SERVICE DELIVERY AFTER THE GREAT RECESSION

Since the Great Recession, some have argued that local governments have become ‘austerity machines’ that cut and privatize services and undermine unions. We conducted a national survey of US municipalities in 2012 to examine how service provision level and delivery methods are related to local stress and capacity, controlling for community need and place characteristics. We find that local governments are balancing the pressures of stress with community needs. They use alternative revenue sources and service delivery methods (privatization and cooperation) to maintain services. Unionization is not a barrier to innovation. Further, we find that ethnically diverse suburbs are providing more services than other suburbs, thus acting more like metro core cities. We find that the Great Recession has not dramatically shifted local government behaviour to a ‘new normal’ of fiscal austerity. Instead, we find municipalities practising ‘pragmatic municipalism’ to maintain their public role.     

WHY DO LOCAL GOVERNMENTS PRIVATIZE THE PROVISION OF WATER SERVICES? EMPIRICAL EVIDENCE FROM SPAIN

Why do some local governments privatize water services, while others opt for public management? Economic literature has been unable to demonstrate that private management is more efficient than public management, so there must be other reasons that lead governments to privatize the service. But what are they? This paper presents the results of a study that analyses the factors behind the privatization of water services with data from 741 municipalities located in the South of Spain over a period dating from 1985 to 2006. A discrete choice model analyses the influence of each factor on the likelihood of privatization. One of the novelties of this paper is that we take the value of the explanatory variables at the time when water services are privatized. Among our findings, it is worth highlighting the importance of the size of municipalities, their financial burden and the neighbouring effect.     

Does intermunicipal cooperation increase efficiency? A conditional metafrontier approach for the Hessian wastewater sector

ABSTRACT

This paper analyses the relationship between intermunicipal cooperation and efficiency of public service provision. Organisational arrangements of public service production, including self-provision, joint provision or contracting, affect incentives and internal transaction costs. Hence, cooperation gains from scale effects need to be balanced against technical inefficiencies. We analyse relative efficiency of wastewater disposal for German municipalities. We employ a conditional analysis in conjunction with a metafrontier approach to calculate relative efficiency measures and technology gap ratios controlling for organisational arrangements and further environmental variables. Jointly providing municipalities and contractor municipalities exhibit lower technical efficiency than self-providing and contracting municipalities. As confirmed by previous research, scale effects from cooperation and contracting apply to small municipalities primarily.     

Measuring the efficiency of Spanish municipal refuse collection services

The aim of this article is to analyse the technical efficiency of the refuse collection services in 75 municipalities located in Catalonia, Spain. The analysis has been carried out using a great variety of techniques, both parametric and non‐parametric. Although the results naturally differ according to the technique used, they nevertheless are consistent in ranking the units analysed. Finally, we have looked into the relation existing between efficiency and the public or private management of the service. The results seem to support the idea that the framework for competition in which the service is provided could be more relevant than the private‐public management dichotomy.     

Intermunicipal cooperation,public spending and service levels

ABSTRACT

Local governments can increase size in particular policy fields through cooperation with other local governments. This is often thought to improve efficiency, but there is little empirical evidence supporting this hypothesis. We study the case of the Netherlands, which has been a veritable laboratory of intermunicipal cooperation (IMC), using panel data for 2005–2013. We find no evidence that IMC reduces total spending of the average municipality. Indeed, IMC seems to increase spending in small and large municipalities, leaving spending in mid-sized municipalities unaffected. In one specific field, tax collection, spending may be reduced through IMC. Spending in this field is low, which may explain why total spending is unaffected. Instead of lowering spending, municipalities may have used possible cost savings as a result of IMC to improve public service levels. We do not find evidence substantiating this hypothesis, however.     

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 Spain's 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.     

Municipal population size and the benefits of inter-municipal cooperation: panel data evidence from Japan

ABSTRACT

Intermunicipal cooperation (IMC) facilitates efficient public service delivery. This study measures how the benefits municipalities gain through IMC differ according to municipal population size and service provision type. Focusing on public health and fire protection services, this study employs panel data regression for 1,706 Japanese municipalities over a five-year period, 2012–2017. This study has several major findings. First, an increase in the IMC spending ratio reduces public spending in both the studied services. Second, the marginal effect of IMC varies depending on the size of the municipal population. More specifically, the marginal effect of IMC on public health has a narrow confidence interval with a wide ranging population scale, while the marginal effect of IMC on fire protection produces negative values for only 151 municipalities due to extensive standard error. These findings can help municipalities take advantage of IMC to improve public service delivery.     

Russian Nonprofits as Contracted Providers of Municipal Social Services: Initial Experience

Abstract

In the Russian Federation the delivery of social services to deserving population groups is mostly the responsibility of municipalities and other local governments. Services are delivered by municipal agencies. One way to inject competition into the delivery system is for local government to hold competitions to contract for social service delivery. The competitions can be open to nonprofit organizations (NPOs), some of which have been providing assistance in recent years to needy individuals and families similar to those that would be contracted. This article reports the results of an assessment of pioneering pilot competitions for the delivery of social services in three municipalities in 2000–2001: Perm, Velikii Novgorod, and Tomsk. The objective of the pilots was to determine if the local governments could hire NPOs to be service providers following a rigorous and fair competitive process and whether the selected NPOs would do an adequate job in delivering services. In general the results of these competitions indicate the extent of the challenge to improving service delivery in Russia. It seems fair to say that the competitions in Perm and Tomsk were essentially a competitive grant process where the winners were more or less free to determine the services actually delivered. On the other hand, the Novgorod competition had much more in common with a contractual procurement of social services—the competition was nominally open to firms of all legal forms and the services were well-defined. In execution, the reality in Novgorod fell far short of this model.     

The effects of social and economic distance on interlocal police cooperation

Fragmented jurisdictional settings, particularly in the provision of local police services, characterize many metropolitan areas in this country. An im portant issue is whether differences in the social and economic makeup of local jurisdictions constitute barriers to the cooperation that is necessary to control urban crime. In this article, social, economic, and racial differences between suburban municipalities are examined to determine their effects on measures of cooperation between local police departments.

Social distance and differences in racial mix between jurisdictions are more strongly and more consistently associated with levels of cooperation between suburban police departments than is economic distance. Greater social distance appears to enhance cooperation. The study indicates that greater differences in the proportions of nonwhite residents between suburban municipalities are linked to lower levels of cooperative agreements between police departments. Finally, the findings from this study indicate that greater economic distance is not associated consistently with lower levels of cooperation.     

THE PUBLIC MANAGEMENT CHALLENGES OF CONTRACTING WITH NONPROFITS for SOCIAL SERVICES

ABSTRACT

States and municipalities increasingly pursue privatization as a way to deliver public goods and services because of two expected outcomes, reduced costs and quality improvements. Several reasons are frequently cited for these anticipated benefits ranging from market competition to increased management flexibility and discretion to fewer rules and regulations. One policy area in which government has privatized many services through contracting with nonprofit organizations is social services. Contracted services are as diverse as providing shelters for the homeless, vocational education and job retraining, domestic violence services, refugee esettlement, child and elder abuse services, and food banks. A proliferation of public administration and nonprofit organizational scholarship has examined a range of issues associated with the government-nonprofit social service contracting relationship, not the least of which are topics related to management, measurement, and accountability. This article examines the public management challenges and implications of contracting with nonprofit organizations for the delivery of social services.     

Evaluating local government performance in times of crisis

In recent years, Spanish local governments have come under increasing pressure to accommodate severe economic restrictions while maintaining their provision of local public services. We analyse overall cost efficiency in Spanish local governments during the period of the economic crisis (2008–2013), under four different non-parametric methodologies. Moreover, given how problematic it is to precisely define what municipalities do, we compare three different output models with various measures of quantity as well as quality. Results suggest that Spanish local government efficiency improved over the period 2008–2013 since budget expenditures (inputs) fell while local public services and facilities (outputs) were maintained. We also find evidence of the possible implications of service quality when measuring municipalities’ efficiency, and of structural differences in the average efficiency between municipalities located in different Spanish regions. Finally, our results confirm that the level and variation of efficiency scores are affected by the approach taken.     

Contract Regimes and Reflexive Governance: Comparing Employment Service Reforms in the United Kingdom, the Netherlands, New Zealand and Australia

Contemporary debates concerning the nature of 'new governance' typically focus upon the shifting roles played by bureaucracies, networks and markets in the provision of public services (Kooiman 1993; Ormsby 1988). At the core of these recent changes we find a strong interest in having private agents deliver public services. Sometimes this is expressed as privatization and in other cases a 'mixed economy' of public and private participation may be devised (Williamson 1975; Moe 1984). In this study a number of central elements of neo-liberal public management are brought together in a single focus upon the 'contract regime' in order to examine the extent to which single initiatives might combine to produce a recognizable system of governance. Such an institutional form may then be more carefully specified and its impact compared in different governmental systems. Using a four-country comparison of employment service reform the study shows that distinctions based upon degree of privatization do not adequately explain regime types whereas distinctions based upon 'compliance-centred' or 'client-centred' forms of contracting are more powerful. The type of reflexive interaction between different elements or levels of contracting also explains country differences.     

Political Competition and Local Social Spending: Evidence from Brazil

Electoral theories of democracy imply electoral competition insures accountability. Using data on local elections, socioeconomic factors, and municipal budgets from more than 5,000 municipalities in Brazil for the years 1996, 2000, and 2004, we find that municipalities with more competitive elections allocate less to social spending compared to municipalities with little political competition. We argue that previous theory on political competition and public goods obscures the critical role that financial resources play in shaping the dynamics of social spending and political competition. Municipalities with small budgets lack the resources necessary to engineer convincing electoral victories. Where resources are negligible, voter turnout is low, and incumbents rarely win reelection. Incumbent parties in municipalities with large financial resources win big. Armed with adequate resources, incumbent parties mobilize voters and win by large margins. This new argument and evidence reconcile contradictory findings in the existing literature on competition and public goods.     

台湾地方基层行政管理体制变迁及影响分析

传统西方分权理论中的“奥茨定理”认为，权力向基层政府下放，有助于改善公共服务。然而在台湾都市化进程中，2010年台湾部分县市合并升格为直辖市，以此同时，原有的乡镇政府改为从属于市（直辖市）的区，基层政府的权力出现向县市一级政府集中的现象。在对台湾基层政府体制沿革历史梳理基础上，作者通过实地调研，对这一基层行政体制调整的动因、特点、内容及影响进行了分析。本研究发现，台湾都市化进程中，基层政府权力向上集中有利于提升行政效率和公共服务规模效益的需求，得到广泛社会认同，但同时，也导致国民党对基层的控制有所减弱，对台湾的政治生态具有深远影响。     

Why Some Cities Provide More Public Goods than Others: A Subnational Comparison of the Provision of Public Goods in German Cities in 1912

What determines a government’s level of public goods provision? Most scholarship tends to focus on the “demand side” of public goods provision, highlighting how varying patterns of social preferences shape the provision of public goods. In an analysis of municipal hospitals and infant health clinics in Germany’s 84 largest cities in 1912, this article uses an original dataset to test a variety of hypotheses to introduce an alternative logic centered around the institutional capability of local governments. The findings suggest a supply-side theory of public goods provision in which the fiscal resources of cities and the professionalism of local government officials are important determinants of the level of public goods. The implications of these findings are two-fold: first, in federal political systems, highly capable local governments—with resources, expertise and professionalism—might represent a “decentralized” or “bottom-up” path for achieving higher overall levels of state infrastructural power in a political system. Second, public health threats might serve as a crucial trigger for the development of local capacity and hence state infrastructural power more broadly.     

Does Ownership Matter for the Delivery of Professionalized Public Services? Cost‐efficiency and Effectiveness in Private and Public Dental Care for Children in Denmark

Recent decades have witnessed considerable interest in the cost‐efficiency and effectiveness of public services. Private provision is often claimed to be more cost‐efficient than public provision, but these efficiency gains are accused of being at the expense of effectiveness. Most of the evidence comes from relatively simple, technical services, because effectiveness is often difficult to define and measure for services produced by professionals. In addition, type of ownership might very well affect services produced by professionals differently as a result of professional standards and other regulation. The case in question, child dental care in Denmark, is a professionalized service which is remarkable for its clear and quantifiable measure of effectiveness. The findings show that neither cost‐efficiency nor effectiveness of public and private producers differs. The data represent cost and outcome measures controlled for structural variables for the 275 Danish municipalities between 1996 and 2002.     

Municipalities’ Contracting Out Decisions: An Empirical Study on Motives

Municipalities have various motives behind their decisions about the modes of their task execution. Empirical studies have not yet provided a fully satisfying explanation for municipalities’ contracting out decisions. Therefore, we interviewed several Dutch principal municipal managers to evaluate the causes and motives for the choices of the current structures for the delivery of their services. This study investigates the relevance of common public choice and transaction cost motives on contracting out and explores the relevance of additional institutional and pragmatic motives. We found that municipalities do not regularly evaluate the service provision of their activities and the potential benefits of outsourcing. In fact, if the activity has an adequate performance level and complaints from municipal employees, local politicians or inhabitants do not occur, a catalyst for a discussion on the contracting out of this activity is, in general, lacking. Principally in the case of structural underperformance municipalities consider a change of service provider, and then the efficiency motive is most relevant. Thereby, institutional motives – such as the stability of service provision – and pragmatic motives are also relevant. Institutional pressures in particular initiate the evaluation of organisational performance, whereas both economic motives as institutional and pragmatic motives are used to compare alternative service providers.     

Cooperation,not cost savings: explaining duration of shared service agreements

Among local governments, inter-municipal cooperation is the growing reform; but the literature is silent regarding the determinants of longer-term shared service agreements. We conducted a survey of all local governments in New York State in 2013 to assess the level of sharing across 29 public services. The duration of shared service agreements varies from 1 to 80 years. What explains this difference? Our hierarchical linear model shows that service sharing agreements fall along a cooperation continuum, where cost savings are a determinant of shorter agreements, while the public values of service quality and cross-jurisdictional coordination explain longer-term agreements. We also find that positive past experience with sharing partners increases the duration of sharing agreements. Our analysis lays the foundation for new theories of shared services that build directly from the benefits of improved regional coordination, inter-municipal reciprocity and service quality, not from theories based solely on competition and costs.