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Private Markets, Contracts, and Government Provision

What Explains the Organization of Local Waste and Recycling Markets?

Molly Macauley

Resources for the Future

Soren Anderson

University of Michigan

The authors study determinants of market organization of local public services by an examination of one of the most visible services, residentialwaste management. Using a multinomial logit model and data for 1,000 U.S. communities, the authors explore the effects of political influence, voter ideology, environmental constraints, production costs, and contracting transaction costs on a community’s choice of service delivery options. They find that costs are significant in explaining communities’ choices. In contrast, few of the political variables are statistically significant. These results hold for both waste and recycling, providing further evidence that local governments emphasize costs when choosing between private and public provision.

Key Words: market organization • solid waste • recycling • local public goods

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