INTER‐MUNICIPAL COOPERATION AND COSTS: EXPECTATIONS AND EVIDENCE

Austerity and fiscal crisis make the search for cost‐saving reforms in local government more critical. While cost savings from privatization have frequently proven ephemeral, inter‐municipal cooperation has been a relatively understudied reform. We analyse the literature on cost savings under cooperation and find that savings are dependent on (1) the cost structure of public services, particularly those related to scale and density economies and externalities, (2) the structure of local government (size, metropolitan location, powers granted by the nation or regional state), and (3) the governance framework at the local/regional level where cooperation varies from informal to formal. European studies give more emphasis to cost savings, while US studies focus on coordination concerns arising from the higher degree of devolution in the US local government system.     

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.