Privatization and Competition in the Delivery of Local Services: An Empirical Examination of the Dual Market Hypothesis

XREAP Working Paper No. 2008-04

35 Pages Posted: 25 May 2011

See all articles by Germà Bel

Germà Bel

University of Barcelona - Department of Political Economics

Xavier Fageda

University of Barcelona

Date Written: April 1, 2008

Abstract

This paper empirically analyses the hypothesis of the existence of a dual market for contracts in local services. Large firms that operate on a national basis control the contracts for delivery in the most populated and/or urban municipalities, whereas small firms that operate at a local level have the contracts in the least populated and/or rural municipalities. The dual market implies the high concentration and dominance of major firms in large municipalities, and local monopolies in the smaller ones. This market structure is harmful to competition for the market as the effective number of competitors is low across all municipalities. Thus, it damages the likelihood of obtaining cost savings from privatization.

Keywords: Competition, Concentration, Local Services, Privatization

Suggested Citation

Bel, Germà and Fageda, Xavier, Privatization and Competition in the Delivery of Local Services: An Empirical Examination of the Dual Market Hypothesis (April 1, 2008). XREAP Working Paper No. 2008-04, Available at SSRN: https://ssrn.com/abstract=1843146 or http://dx.doi.org/10.2139/ssrn.1843146

Germà Bel (Contact Author)

University of Barcelona - Department of Political Economics ( email )

Av. Diagonal, 690
Barcelona, 08034
Spain

HOME PAGE: http://www.ub.edu/graap/beling.htm

Xavier Fageda

University of Barcelona ( email )

Av. Diagonal 690
08034 Barcelona
Spain
0034 934021947 (Phone)
0034 934024573 (Fax)

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