Does cooperation affect service delivery costs? Evidence from fire services in Norway

Abstract

The objective of this study is to develop our understanding of how cooperation between local governments affects service delivery costs. The current study provides three contributions to the existing literature: (1) we assess the relation between inter‐municipal cooperation and service delivery costs for fire services; (2) we evaluate whether different forms of cooperation affect costs differently; and (3) we analyse how the number of cooperation partners affects the cooperation–cost relation. Theoretically, it is argued that cooperation promotes scale economies, but that increasing transaction costs from additional cooperation partners may outweigh these potential benefits. The data show that there are significant economies of scale linked to cooperation, but that this depends on the organizational form of the cooperation as costs are lower for contractual agreements than for joint organizations. Furthermore, cost benefits decrease significantly as the number of cooperation partners increases, and more so for contractual agreements than for joint organizations.

Multiple principals, multiple problems: Implications for effective governance and a research agenda for joint service delivery

“…In organizations, relationships typically involve multiple actors. Consider local refuse collection: while some large cities singly own refuse collection firms, many refuse collection organizations in Europe are owned inter-municipally, that is, by multiple municipalities, or by public-private partnerships (Dijkgraaf and Gradus 2007;Sørensen 2007;Da Cruz and Marques 2012;Garrone et al 2013;Bel et al 2014;Blåka 2017;Giacomini et al 2018;Soukopová and Vaceková 2018;Gradus and Budding 2018). In the United States, inter-municipal contracting is more frequent (Warner and Hebdon 2001;Marvel and Marvel 2008;Hefetz et al 2012;Bel and Warner 2015).…”

Cooperation among Local Governments to Deliver Public Services

“…Issues related to the cooperation of states or jurisdictions have been debated by economic theorists (see e.g., Blume and Blume ). The joint provision of public goods by communities (i.e., groups of municipalities) is likely to create economies of scale and thus to offer more possibilities for cutting costs.…”

Enhancing Methodological Reporting in Public Administration: The Functional Equivalents Framework

“…In its absence, researchers are likely to make ad hoc interpretations that are of little academic interest. Blåka (2017) provided an interesting illustration on how competing theories on the relationship between intermunicipal cooperation and costs are tested, and how the results obtained from her empirical analysis can be interpreted in the light of those competing theories.…”