Article2007

Why do local governments privatise public services? A survey of empirical studies

306 citations0/0 files storedLocal Government Studies

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Local Government Finance and Decentralization Public Policy and Administration Research Public-Private Partnership Projects

Abstract

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.

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References

1956A Pure Theory of Local Expenditures 1979Transaction-Cost Economics: The Governance of Contractual Relations 1996Production, Information Costs and Economic Organization 1986The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration 1990Property Rights and the Nature of the Firm 1971Bureaucracy and Representative Government 2001From State to Market: A Survey of Empirical Studies on Privatization 1997The Proper Scope of Government: Theory and an Application to Prisons

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