GENERALIDADES
I.I INTRODUCCIÓN:
1.5 Molde
Empirical studies about the impact on costs of the private delivery of local services do not
explanation for this ambiguous relationship is that privatization implies some transaction costs due to the use of external firms to deliver the service. However, evidence for local services that are not affected by a high degree of transaction costs, such as solid waste collection, is not conclusive either, concerning the expected cost savings from privatization.
An additional explanation is the lack of competition in the markets for local services, since several studies show that competition rather than ownership is of importance in producing local services efficiently.
In this paper, we have shown that competition may be soft in solid waste collection when there is an intensive use of private delivery. In this sense, the market analyzed is characterized by a high degree of concentration and the number of firms that have participated in contract tenders is relatively low.
More importantly, we have found empirical evidence in favor of the dual market hypothesis. Large firms that operate at a national level dominate the market for contracts in highly populated municipalities and, it would appear, in municipalities that belong to the same urban area. Although the number of firms that participate in contract tenders may be higher in these municipalities, major firms seem very often to win the award process.
Smaller firms that operate at a regional or local level dominate the market for contracts in less-populated municipalities and, it would appear, in municipalities from rural areas isolated from big cities. In these cases, the number of firms that participate in contract tenders may be particularly low, so that the scope of competition for the market is very modest.
In short, cost savings from privatization require strong competition in the markets of contracts for local services. More attention must be devoted to ensuring that the award contracting procedures have the maximum number of effective competitors. Only in such a case will the tariffs charged by contract holders be clearly related to the costs of delivering the service.
Acknowledgements: Our research on local privatization has received financial support from the Spanish Commission for Science and Technology (CICYT, SEJ2006-04985), and from Catalonia’s Competition Commission. We are thankful to Laia Domènech for her very helpful research assistance.
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TABLES AND FIGURES
Table 1. Production forms for solid waste collection in Catalonia Municipalities and Population (%) 2006
Internal
Table 2. Market shares of contracts for local services in Catalonia. 2006 (N = 203)
Firm Contracts (%) Population (%) FCC 26.96 47.42
Note: Data on name of firms available for only 200 municipalities (203 observations).
Table 3. Concentration index for solid waste collection in Catalonia. 2006 (N = 203) CR1 (%) CR4 (%) HHI
Contracts 26.96 53.61 0.106 Population 47.42 81.82 0.278 Source: Obtained by the authors from survey on local services.
Table 4. Evolution of concentration for solid waste collection in Catalonia. Population (N = 106) Year CR1 (%) CR4 (%) HHI
2000 46.82 78.44 0.268 2006 49.37 83.84 0.304 Source: Obtained by the authors from survey on local services.
Table 5. Number of firms in most recent contract tender
Source: Obtained by the authors from survey on local services
Note: Data on number of firms available for only 154 municipalities (157 observations).
Table 6. T-test for mean differences in number of firms in most recent contract tender Municipality size
Table 7. Descriptive Statistics (N = 203, Year = 2006) Continuous variables Mean Standard
Deviation Minimum Maximum
Population 25,388.64 62,356.84 1,052 401,401
%Major-region 48.60 16.69 0 66.7
Dnational-party 203 82 121
Dregional-party 203 67 136
Dother-parties 203 54 149
Note: Data on number of firms available for only 154 municipalities (157 observations).
Source: Obtained by the authors from survey on local services.
Table 8. Estimates of the equation (logit). Period: 2006
Specification (1) Specification (2) Specification (3) Specification (4) Population 6.56e-06 Note 1: Specification (1): No correction for spatial correlation & variable for number of firms not included.
Specification (2): Correction for spatial correlation & variable for number of firms not included.
Specification (3): No correction for spatial correlation & variable for number of firms included.
Specification (4): Correction for spatial correlation & variable for number of firms included.
Note 2: Standard errors in parentheses (robust to heteroskedasticity).
Note 3: Significance at 1% (***), 5% (**), 10% (*).
Note 4: In specification (4), Dregional-party is significant at 13%.
Table 9. Estimates of the dynamic equation (multinomial logit). Period: 2000-2006 Specification (1) Specification (2) -1 (from major to minor) Note 1: Specification (1); No correction for spatial correlation .
Specification (2); Correction for spatial correlation.
Note 2: Standard errors in parentheses (robust to heteroskedasticity).
Note 3: Significance at 1% (***), 5% (**), 10% (*).
Note 4: Dmajor (from 0 to -1: 7 observations, from 0 to 1 observations: 18, no change: 81).
2006
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