PUBLIC VERSUS PRIVATE DELIVERY OF MUNICIPAL SOLID WASTE SERVICES: THE CASE OF NORTH CAROLINA

This paper examines the effects of different institutional arrangements and characteristics on cost savings, efficiency gains, and productivity of delivering municipal solid waste services. A cost function approach is employed, and North Carolina municipal data for three years (1997, 2001, and 2003) are used for the analysis. Empirical findings indicate that there is no significant difference in cost savings between public delivery and private contractor delivery of solid waste services, a finding similar to those of other recent studies. There are three possible reasons for this. First, the threat of competition and contracting out might have led to cost savings in the cases of public delivery. Second, there might be a lack of competition because a few large private contractors have been able to win follow‐on contracts over the years. Third, there might be substantial transaction costs arising as the result of private contracting. (JEL H40, H83, Q53)