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Municipal Government Approaches to Service Delivery: An Analysis from a Transactions Cost Perspective

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  • Nelson, Michael A

Abstract

Municipal governments are less likely to contract out for service delivery if citizen preferences for the service are heterogeneous. This conclusion is based on an analysis that extends to the public sector the empirical industrial organization literature on transaction costs and the 'make or buy' decision faced by private firms. Service delivery practices for sixty-three municipal services are examined. The findings are consistent with the proposition that the cost of writing and monitoring contracts may be an important consideration in municipal service delivery approach and that bureaucratic supply may not be as inefficient as some previous studies indicate. Copyright 1997 by Oxford University Press.

Suggested Citation

  • Nelson, Michael A, 1997. "Municipal Government Approaches to Service Delivery: An Analysis from a Transactions Cost Perspective," Economic Inquiry, Western Economic Association International, vol. 35(1), pages 82-96, January.
    • Handle: RePEc:oup:ecinqu:v:35:y:1997:i:1:p:82-96
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    Cited by:

    1. Bel Germà & Fageda Xavier & E. Mildred, 2014. "Is private production of public services cheaper than public production? A meta-regression analysis of solid waste and water services," Public administration issues, Higher School of Economics, issue 3, pages 103-140.
    2. Mildred E. Warner, 2012. "Does Local Government Size Matter? Privatization and Hybrid Systems of Local Service Delivery," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1212, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    3. Dalton, Christina Marsh & Warren, Patrick L., 2016. "Cost versus control: Understanding ownership through outsourcing in hospitals," Journal of Health Economics, Elsevier, vol. 48(C), pages 1-15.
    4. Laurie Bates & Becky Lafrancois & Rexford Santerre, 2011. "An empirical study of the consolidation of local public health services in Connecticut," Public Choice, Springer, vol. 147(1), pages 107-121, April.
    5. Bertacchini, Enrico & Dalle Nogare, Chiara, 2014. "Public provision vs. outsourcing of cultural services: Evidence from Italian cities," European Journal of Political Economy, Elsevier, vol. 35(C), pages 168-182.
    6. Xavier Fageda & Germa Bel, 2008. "Local privatization, intermunicipal cooperation,transaction costs and political interests: Evidence from Spain," IREA Working Papers 200804, University of Barcelona, Research Institute of Applied Economics, revised Apr 2008.
    7. Aman Luthra, 2020. "Efficiency in waste collection markets: Changing relationships between firms, informal workers, and the state in urban India," Environment and Planning A, , vol. 52(7), pages 1375-1394, October.
    8. Macauley, Molly & Walls, Margaret & Anderson, Soren, 2002. "The Organization of Local Solid Waste and Recycling Markets: Public and Private Provision of Services," RFF Working Paper Series dp-02-35-rev, Resources for the Future.
    9. Germà Bel & Xavier Fageda & Melania Mur, 2011. "Why do municipalities cooperate to provide local public services? An empirical analysis," IREA Working Papers 201118, University of Barcelona, Research Institute of Applied Economics, revised Oct 2011.
    10. Hakam Kamleh, 2005. "La nouvelle organisation ferroviaire britannique : sur la frontière entre intégration et désintégration," CAE Working Papers 28, Aix-Marseille Université, CERGAM.
    11. Henry Ohlsson, 2003. "Ownership and Production Costs: Choosing between Public Production and Contracting-Out in the Case of Swedish Refuse Collection," Fiscal Studies, Institute for Fiscal Studies, vol. 24(4), pages 451-476, December.
    12. Germà Bel & Xavier Fageda, 2009. "Factors explaining local privatization: a meta-regression analysis," Public Choice, Springer, vol. 139(1), pages 105-119, April.
    13. Levin, Henry M., 2012. "Some economic guidelines for design of a charter school district," Economics of Education Review, Elsevier, vol. 31(2), pages 331-343.
    14. Garzarelli, Giampaolo, 2018. "Internal Organization in a Public Theory of the Firm: Toward a Coase-Oates Federalism Nexus," MPRA Paper 86955, University Library of Munich, Germany.
    15. Blaeschke, Frédéric & Haug, Peter, 2014. "Does Intermunicipal Cooperation Increase Efficiency? Evidence from the Hessian Wastewater Sector," IWH Discussion Papers 11/2014, Halle Institute for Economic Research (IWH).
    16. Juan Carlos Garrido-Rodríguez & Gemma Pérez-López & José Luis Zafra-Gómez & Diego Prior, 2018. "Estimación de la eficiencia a largo plazo en servicios públicos locales mediante fronteras robustas con datos de panel," Hacienda Pública Española / Review of Public Economics, IEF, vol. 226(3), pages 11-36, September.
    17. Amir HEFETZ & Mildred E. WARNER, 2010. "Dynamics of service provision: service, market and place characteristics," Departmental Working Papers 2010-33, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    18. Germà Bel & Xavier Fageda & Melania Mur, 2010. "¿Por qué se privatizan servicios en los municipios (pequeños)? Evidencia empírica sobre residuos sólidos y agua," Hacienda Pública Española / Review of Public Economics, IEF, vol. 192(1), pages 33-58, March.
    19. Walls, Margaret, 2003. "How Local Governments Structure Contracts with Private Firms: Economic Theory and Evidence on Solid Waste and Recycling Contracts," RFF Working Paper Series dp-03-62, Resources for the Future.
    20. Mildred E. Warner, 2013. "Does local government size matter? Privatization and hybrid systems of local service delivery," Chapters, in: Santiago Lago-Peñas & Jorge Martinez-Vazquez (ed.), The Challenge of Local Government Size, chapter 11, pages 263-288, Edward Elgar Publishing.
    21. Mildred Warner & Amir Hefetz, 2003. "Rural—Urban Differences in Privatization: Limits to the Competitive State," Environment and Planning C, , vol. 21(5), pages 703-718, October.
    22. Germa Bel & Xavier Fageda, 2008. "Reforming the local public sector: economics and politics in privatization of water and solid waste," Journal of Economic Policy Reform, Taylor and Francis Journals, vol. 11(1), pages 45-65.
    23. Miles Finney, 1999. "Constituency Preference And Police Consolidation: The Case Of West Hollywood," Contemporary Economic Policy, Western Economic Association International, vol. 17(2), pages 235-242, April.
    24. Amir Hefetz & Mildred E Warner & Eran Vigoda-Gadot, 2012. "Privatization and Intermunicipal Contracting: The US Local Government Experience 1992–2007," Environment and Planning C, , vol. 30(4), pages 675-692, August.
    25. Santiago Lago-Peñas & Jorge Martinez-Vazquez (ed.), 2013. "The Challenge of Local Government Size," Books, Edward Elgar Publishing, number 15294, March.

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