Privatization of local government services is assumed to deliver cost savings, but empirical evidence for this from around the world is mixed. We conduct a meta-regression analysis of all econometric studies examining privatization of water distribution and solid waste collection services and find no systematic support for lower costs with private production. Differences in study results are explained by differences in time period of the analyses, service characteristics, and policy environment. We do not find a genuine empirical effect of cost savings resulting from private production. The results suggest that to ensure cost savings, more attention be given to the cost characteristics of the service, the transaction costs involved, and the policy environment stimulating competition, rather than to the debate over public versus private delivery of these services. © 2010 by the Association for Public Policy Analysis and Management.

Many empirical works have been devoted to analysing the factors explaining local privatisation. Overall, most of the empirical analyses have low explanatory power due to the methodological difficulties in capturing the dynamic nature of the privatisation decision. The variables most often considered are those related to fiscal stress and cost reduction and political processes and ideological attitudes. Our review indicates that fiscal stress and pressure from interest group are explanatory factors of local privatisation in those early studies devoted to the US that consider a broad range of services. Furthermore, cost considerations seem to be taken into account by local governments, particularly when scale economies and transaction costs are taken together. Finally, ideological attitudes of policy makers do not seem to influence local service delivery choices in any systematic way.

This article examines the determinants of the location of large firms’ headquarters across a rich sample of European urban areas, focusing on the availability of non-stop intercontinental flights. We also account for the influence of other aspects: the proximity to large markets and specialized providers, congestion and tax costs, the availability of skilled labor, and the role of the urban area in the home country. Controlling for these factors, we find that the availability of direct non-stop flights has a large influence on headquarters’ location. This confirms the importance of transport infrastructures and tacit information exchanges between cities for firm location.

The main objective of this work is to examine whether small municipalities can reduce costs through cooperation and delegation. We first examine factors explaining the decision of municipalities to cooperate and delegate service delivery responsibility, in this case residential solid waste services, to another government. Furthermore, we estimate the impact of cooperation on the costs of providing residential solid waste services. The empirical analysis is done using a sample of small Spanish municipalities. Results of the empirical analysis suggest that cooperation is a pragmatic choice for municipalities with a suboptimal size: municipalities that cooperate by delegating face lower costs for residential solid waste services than those that do not. Furthermore, we find that cooperation allows municipalities to save costs once we control for the form of production and other factors explaining costs.

This paper aims at explaining the differences in the results of empirical studies of motivations for local privatization by undertaking a meta-regression. Our results suggest that fiscal constraints and interest groups were especially relevant in the early studies of the US, which considered several services. Further, studies that focus on one service capture the influence of scale economies more accurately. Finally, our results show that small towns are more affected by fiscal and political factors, while ideology plays a major role for European and large cities. Thus, no clear conclusions emerge from this literature because the findings of each study are sensitive to its characteristics.