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Rural—Urban Differences in Privatization: Limits to the Competitive State

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  • Mildred Warner
  • Amir Hefetz

Abstract

Despite two decades of experience with privatization, US local government use of contracting in public service delivery remains relatively flat. Market approaches to public goods provision emphasize the competitive state, and attribute limited degree of privatization to bureaucratic resistance. Rural development theory emphasizes the uneven impact of market solutions in rural communities. Using national data on US local government service delivery from 1992 and 1997, we analyze differences in local government service-delivery patterns by metropolitan status. Discriminant analysis suggested that structural features of markets are more important than the managerial capacity of government leaders in explaining lower rates of privatization among rural governments. These structural constraints limit the applicability of competitive approaches to local government service delivery. Our results suggest that cooperation, as an alternative to privatization at the local level and as a source of redistributive aid at the state level, may provide a more equitable alternative for disadvantaged rural communities.

Suggested Citation

  • 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.
    • Handle: RePEc:sae:envirc:v:21:y:2003:i:5:p:703-718
    DOI: 10.1068/c008r
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    1. Reid, J. Norman, 1999. "Community Empowerment A New Approach for Rural Development," Rural America/ Rural Development Perspectives, United States Department of Agriculture, Economic Research Service, vol. 14(1), June.
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    4. Henry, Mark S. & Lewis, Willis, 2001. "Welfare Reform: Remedy for Persistent Poverty in the Rural South?," Rural America/ Rural Development Perspectives, United States Department of Agriculture, Economic Research Service, vol. 15(4), February.
    5. Yolanda Kodrzycki, 1994. "Privatization of local public services: lessons for New England," New England Economic Review, Federal Reserve Bank of Boston, issue May, pages 31-46.
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