Why Do Local Governments Resist Contracting Out?

35 Pages Posted: 23 Nov 2013

See all articles by Paola Garrone

Paola Garrone

Politecnico di Milano

Riccardo Marzano

Politecnico di Milano

Date Written: June 21, 2013

Abstract

Local governments are reluctant to contract out public services. This paper shows that resistance to contracting out is not at odds with efficiency. The sample includes all 135 municipalities that were distributing gas in an Italian region when a national reform ended in-house delivery. Contracting out decisions have been analyzed for the subsequent 12 years through a duration model that admits time dependence and interaction with inter-municipal cooperation. It has been found that opposition to service outsourcing is more likely if scale and managerial efficiency have already been enhanced. Fiscal stress and the activism of citizens are shown not to play a significant role.

Keywords: Contracting out; Efficiency; Municipalities; Inter-municipal cooperation

JEL Classification: H50, L33, L95

Suggested Citation

Garrone, Paola and Marzano, Riccardo, Why Do Local Governments Resist Contracting Out? (June 21, 2013). Available at SSRN: https://ssrn.com/abstract=2357944 or http://dx.doi.org/10.2139/ssrn.2357944

Paola Garrone (Contact Author)

Politecnico di Milano ( email )

piazza Leonardo da Vinci 32
Milano, 20133
Italy
+39-02-23992742 (Phone)

Riccardo Marzano

Politecnico di Milano ( email )

Via Lambruschini 4/b
MIlano, MI 20156
Italy

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