The Cost of Contracting Out

Previous literature on the question of cost savings from privatization of public services leads to rather ambiguous results. This paper offers an estimation and specification of an explanatory model of factors that produce costs in solid waste collection and disposal. The uniqueness of this model lies in its variables, which derived from various studies corresponding with solid waste collection and disposal in the United States. On one hand, the results indicate a reduction of costs due to privatization of solid waste collection. On the other hand, provision of the service by public monopoly represents a significantly more cost effective choice when compared to a private monopoly. The results suggest that the government undergo a thorough examination of market structure before it decides to contract out.

Autorentext

Bc. Katerina Gawthorpe obtained her Bachelors degree in Economics at the University of Economics in Prague. She is currently pursuing her Master's degree in Economic Analysis at the same institution. With over six years of experience in economics and a diverse international background her skill-set enables a pragmatic approach to economic analysis.