Cost advantage cooperations larger than private waste collectors

Abstract

For refuse collection, we estimate the cost effects of different institutional modes using panel data for almost all Dutch municipalities between 1998 and 2010. The modes we consider are private enterprises, intermunicipal cooperation, municipality-owned enterprises and in-house collection. For private companies, the cost advantage becomes substantially smaller and nonsignificant if municipal fixed effects are included. The cost advantage of intermunicipal cooperation is larger in this case than that of privatization.

Keywords:

• waste collection
• private firms
• contracting out
• fixed effects

JEL Classification:

• D43
• L33
• R51

Notes

¹ Price variables for the different inputs are not included as there is no ex ante reason for factor prices to differ between municipalities. Wage bargaining takes place at a national level.

² The Dutch Waste Management Council (AOO) presents figures on tariffs for collecting and disposing of garbage and on the extent to which these tariffs cover total costs. If tariffs do not cover total costs, we use coverage factors (provided by the AOO) to calculate costs.

³ The number of municipalities decreased from 548 in 1998 to 431 in 2010. For 1998, data are available on 72% of the municipalities. From 2001, data on almost all municipalities (more than 95%) are available.

⁴ All estimations are based on pooled least squares. All SEs are White corrected (cross-section specific) as homoscedasticity was rejected with the Breusch–Pagan test at the 1% level.

⁵ Estimations for fixed effects can be obtained upon request.

⁶ As the estimations are in logs, the effect can be calculated using e ^x – 1 and by multiplying this by 2.5 as collection costs are on average 40% of total costs.