Drivers and barriers of inter-municipal cooperation in health services – the Norwegian case

Inter-municipal cooperation in service delivery is widespread, as is the notion that this type of cooperation is primarily driven by economies of scale. However, the empirical results appear to be inconclusive, suggesting that additional explanatory factors are needed to explain why municipalities cooperate. This study aimed to identify the factors and conditions that influence the level of inter-municipal cooperation in health services by exploring a broad set of explanatory factors that go beyond simple economic concerns. In addition to confirming that a small population-size and fiscal stress constitute important drivers of inter-municipal cooperation, the results from this study also demonstrates the need to consider geographical location and heterogeneity relative to neighbouring municipalities as potential barriers to such cooperation.     

Remapping the State: Inter-Municipal Cooperation through Corporatisation and Public-Private Governance Structures

The institutional setting of regional and local government in Italy appears to be characterised by an ongoing process of reform and adjustment ever since Regions were created in 1970. More recently, provinces and Municipalities gained wide autonomy in 1990, and the constitution itself was revised in 2001 to set up what is sometimes referred to as a ‘quasi-federal’ system of intergovernmental relations. In this context, inter-municipal cooperation also has witnessed several phases and dynamics, ranging from (very rare) fusions, through single-purpose cooperation, to integrated service management (Public-public partnership, and consortia for the management and/or regulation of public utilities). More recently, and most notably over the past decade, inter-municipal cooperation has taken on a new form, consisting in the shared ownership in joint-stock companies. The so-called ‘corporatisation’ of public bodies, i.e. the creation of public-owned (or mixed public-private), private-law companies and corporations for the fulfilment of public-interest activities, has come to constitute a network of inter-municipal cooperation that appears to represent a shift from an institutional intergovernmental structure of cooperation, to one that is pre-eminently played out in the arenas of public-private forms of governance. The article analyses the literature and overarching trends in inter-municipal cooperation in Italy, and draws on very rich original data on the companies owned by Municipalities in six Italian regions to show how these companies represent the locus of inter-municipal (and multi-level) relations that go well beyond the formal boundaries of local administrations, and are often brokered by powerful private partners.     

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.     

Bridging the accountability and transparency gap in inter-municipal collaboration

Municipal governments are increasingly showing interest in inter-municipal cooperation. Often overlooked in the discussion of such collaborative relationships are concerns related to accountability and transparency. In this article, we introduce a framework to measure accountability and transparency in inter-local relationships and test it with a brief case study of inter-municipal cooperative agreements collected from the Greater Toronto Area. Overall, the agreements collected score very low on our accountability scale, mainly because of low levels of public access and poor internal accountability. We conclude the study by examining the challenges of having multiple lines of accountability in local service collaboration.     

Is cooperation cost reducing? An analysis of public–public partnerships and inter-municipal cooperation in Brazilian local government

ABSTRACT

In local government systems worldwide, financial pressures have obliged local authorities to focus on cost-efficient methods for providing local services, including inter-municipal agreements and public–public partnerships. However, in comparison with municipal mergers, privatisation and other approaches to the problem, the cost impact of the cooperative provision has not yet been thoroughly examined empirically. Moreover, available empirical research has largely concentrated on waste disposal in developed countries. The present paper seeks to contribute to the empirical literature on inter-municipal agreements and public–public partnerships by comparing their impact on costs with ‘stand-alone’ provision in a range of non-waste local services. In contrast to the bulk of existing studies, our analysis takes place in a developing country context by examining Brazilian local government over the period 2013/15. We found that – on the whole – cooperative provision is less expensive than the ‘stand-alone’ provision for the services studied. Our results can be explained by the size and composition of the population, together with the politics for cooperation.     

Inter-Municipal Cooperation and Satisfaction with Services: Evidence from the Norwegian Citizen Study

We investigate the effects of inter-municipal cooperation on citizen satisfaction with fire services and refuse handling. While there is a growing interest in cooperation as a way of providing municipal services, little is known of the effect on citizen satisfaction. Through a multilevel analysis combining individual and municipal data, we find that inter-municipal cooperation has a negative effect on satisfaction with fire services, no effect on refuse collection but a positive effect on satisfaction with source separation. The results, we argue, show how the organizational form may affect satisfaction in different ways depending on service characteristics.     

Internal factors of intermunicipal cooperation: what matters most and why?

ABSTRACT

This paper focuses on the internal aspects of intermunicipal cooperation, providing a new and innovative approach to the cost effectiveness of municipal waste management. We examine a sample of 658 municipalities in the Czech Republic’s South Moravian Region and 205 cooperating municipalities separately during 2012–2014. The results, based on ordinary least-squares regression, show that cost reduction is significantly influenced by the institutional arrangement of intermunicipal cooperation, the participation of municipal representatives in management, and professional managers. The paper shows that a crucial role in cost reduction is played by internal factors that have been investigated only marginally so far. Cost increases are related to municipality sizes larger than 10,000 inhabitants and to profit-oriented behaviours of waste collection companies. The results differ in the size samples of municipalities; only the impact of institutional arrangement is significant in all groups of municipalities.     

Management Discretion and Political Interference in Municipal Enterprises. Evidence from Italian Utilities

The attention of scholars and policy-makers is shifting from full privatisation to alternative measures as a means to improve the efficiency of public services. This article focuses on three restructuring measures adopted by local governments: partial privatisation (without transfer of control rights), inter-municipal joint ventures, and the presence of outside directors on the Board. Divergent hypotheses on these measures have emerged from two economic theories, namely public choice and the agency perspective. An empirical analysis investigates the effects of restructuring processes on a sample of Italian municipal utilities. Partial privatisation has been shown to play a significant and positive role, while Board independence from management has a less significant influence. Multi-government utilities have been found to suffer from severe coordination costs, which are not outweighed by scale benefits. Our findings reveal that management discretion is a significant source of inefficiency in municipal enterprises.     

Privatisation,contracting-out and inter-municipal cooperation: new developments in local public service delivery

ABSTRACT

We briefly review recent advances in the empirical analysis of the privatisation and inter-municipal cooperation of local public services and discuss the potential of these studies. The core issues examined include the identification of factors driving delivery choices and the effects of privatisation and cooperation on service provisions. In addition to reporting the specific empirical findings of each study, we highlight the innovative methodologies that they each adopt. Finally, we outline a number of potential avenues for further research.     

The effects of market concentration on costs of local public services: empirical evidence from Dutch waste collection

ABSTRACT

Different concentration indexes are calculated for the Dutch waste collection market and all show that this market was highly concentrated in 2002, 2006, 2010 and 2014. The estimation results in 2002 show that private collection is cheaper but high concentration increases costs of private collection and therefore (partly) offsets the advantage of contracting out. In 2006, the savings gained from privatisation and also the effect of concentration disappear, probably due to the introduction of a VAT-compensation fund. In 2010, for an area with a radius of 30 km, high concentration increases costs, but for larger areas, this effect mostly disappears. For 2014, in most estimations, this concentration effect disappears. If we include fixed effects for a panel, the cost advantage of inter-municipal cooperation is larger than that of private production and concentration effects also disappear. Overall, these estimation results are rather independent of the concentration indexes used, if we investigate several indexes as an alternative for the Herfindahl–Hirschman index.     

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.     

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.     

Service quality and the optimum number of members in intermunicipal cooperation: The case of emergency primary care services in Norway

Intermunicipal cooperation (IMC) is often used as a mean to reap scale benefits. Most studies on the effects of IMC focus on cost savings, while service quality is overlooked. In this study, the focus is set on input quality in a service characterized by high asset specificity and need for redundancy: emergency primary care. We analyze how mode of governance affect performance by (1) measuring whether IMC versus single-municipal production affects input quality and (2) identifying optimum scale of operation; effect of the number of participants in the cooperation on input quality. The findings indicate that cooperation weakens the input quality of medical workforce, but that this negative effect is balanced out as the number of participants increases, indicating that cooperation needs to reach a certain size to achieve optimum scale of operation. Concerning equipment, both cooperation in general and an increasing number of participants decrease the input quality.     

Inter-municipal cooperation in the case of spillovers: evidence from Western German municipalities

ABSTRACT

This paper examines the question: Does the existence of regional spillovers have an impact on the emergence of inter-municipal cooperation (IMC) in tourism marketing? We use data from a survey conducted among Western German municipalities merged with official statistics regarding municipalities’ fiscal, political and demographic situation, as well as tourism-related characteristics. We are the first to apply a hazard model explaining the emergence of IMC. This method has serious advantages over the previously used methods. Surprisingly, our results show that especially municipalities with the opportunity to free ride start IMC more likely than municipalities without this opportunity. Apparently, under certain circumstances, municipalities are better off starting IMC than free riding.     

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.     

Amalgamation Impacts on Local Public Expenditures in Sweden

This paper concerns amalgamation impacts on local public expenditures. The empirical analysis is based on the extensive 1952 municipal reform in Sweden. The 1952 reform amalgamated municipalities in a way that they had at least 2,000–3,500 inhabitants. This was done in the belief that larger municipalities would improve administration efficiency and public services by exploiting economies of scale. The results show that the reform had a negative impact on expenditures as long as the municipalities did not exceed a critical size.     

What Drives Intermediate Local Governments’ Spending Efficiency: The Case of French Départements

The restructuring of the allocation of governmental competencies in France has increased the importance of subnational governments by transferring additional tasks. We analyse the efficiency of public spending on the intermediate government level for the 96 départements in metropolitan France in 2008. Spending efficiency is measured using Data Envelopment Analysis. Results indicate significant room for improvement and we detect an average spending inefficiency of 12%. To explain efficiency, a bootstrapped truncated regression is applied. The second-stage regression shows that efficiency is also determined by exogenous factors and identifies the distance to the national capital, inhabitants’ income and the share of inhabitants older than 65 as significant determinants of efficiency.     

Scale economies in local public administration

A renewed interest in decentralisation has profoundly affected local public governance around the world. Faced with an increasing number of tasks, Dutch municipalities have recently sought physical centralisation, merging into larger jurisdictions in order to target new policy areas more effectively and cost efficiently. Is such a policy of physical centralisation wise? We study economies of scale in local public administration, and find – given transfer payments from central government and current cooperation between municipalities and after controlling for geographical, demographic and socioeconomic variables – substantial unused scale economies of 17% for the average municipality. Between 2005 and 2014 the optimum size of municipalities increases from around 49,000 to 66,260 inhabitants, pointing at an increased importance of fixed costs relative to variable costs in local public administration.     

Beyond privatisation and cost savings: alternatives for local government reform

Unsatisfactory results from privatisation have caused local governments to seek alternative reforms. Inter-municipal cooperation, mixed public/private delivery and contract reversals are three alternatives that have gained traction in the last decade. These alternatives help local governments manage markets for public service delivery as a dynamic process. They maximise government/market complementarities and address a wider array of public goals beyond cost efficiency concerns. The alternative reforms show how local governments balance citizen, labour and community interests to ensure efficiency, coordination and stability in public service delivery.     

Evaluating Brazilian South–South Cooperation in Haiti

I focus on evaluating Brazilian development and humanitarian cooperation in Haiti to answer how emerging providers such as Brazil are contributing to global development through cooperation. The paper establishes criteria for evaluation, arguing that global standards for aid effectiveness need to be expanded. I argue that when assessed on ownership, efficiency and sustainability, cooperation holds several advantages and limits, such as misplaced assumptions that Brazil’s approach is appropriate elsewhere. The discussion is rooted in the context of Haiti in order to underline how outcomes are not pre-determined, but rather depend on the model’s interaction with the partner context.