Public versus Private in Municipal Services Management

Abstract

Recent years have seen Spain and many other developed countries move more and more into outsourcing public service management on the grounds that production costs are higher in the public sector than in the private. However, there is often no empirical support that this is always the case. This paper shows that the private sector is not always more economical or better managed than the public one and, to the best of our knowledge, such a study had never been made in Spain. It draws on a survey by the Spanish Court of Auditors for a sample of municipalities, which analyzes public services like drinking water supply, street lighting, street cleaning and urban solid waste collection. Only in the case of lighting is private management cheaper and more efficient, although in larger municipal populations the opposite is true.