Explanatory factors in the renewal of contracts for the privatisation of public services

Abstract

After analysing the explanatory factors underlying the renewal of privatisation contracts, this paper examines the likelihood of local authorities renewing their contracts with private entities for the provision of public services, by studying a sample of 623 Spanish municipalities for the period 2002–2013, using a logit model. The type of service, the duration of the contract and certain political and economic factors were all found to influence the renewal or otherwise of this type of contract. Moreover, this effect differed between initial privatisation and subsequent contract renewal.

Politicians, bureaucrats and the public–private choice in public service delivery: anybody there pushing for remunicipalization?

“…Chong, Saussier and Silverman (2015) analyze the factors accounting for the renewal of water contracts in France and find that ideology has little influenceif anyin decisions not to renew, while pragmatic considerations are more persuasive. Similar results are reported by Campos-Alba et al (2017) in a study for Spain, where non-renewal decisions are driven by pragmatic considerations. Gradus and Budding (forthcoming) analyze privatization and remunicipalization in the Netherlands and find that conservative parties are more strongly opposed to remunicipalization while progressive parties are more opposed to privatization.…”

Regulation performance of public–private partnerships in the Portuguese water sector

“…Moreover, as claimed by Peda et al (2013), user prices are supposed to be defined at the very beginning of the negotiation phase. However, renegotiations and tariff revisions are a constant throughout the contract lifespan (Campos-Alba et al, 2017), because concessionaries have the right to costs being covered due to the initial financial investments (Armstrong and Sappington, 2007), which contradicts the reasons to engage in a cPPP arrangement. In that sense, TC seems to be high, allowing opportunistic behavior by the concessionaries due to incomplete information transfer at the negotiation stage (Williamson, 1985).…”

“…In addition, private partners dominate financial maps information, but “sometimes such maps do not correspond to reality, and it is essentially dominated by the private partner” (respondent number 8). For all the above-mentioned reasons, contract renegotiations are common (Campos-Alba et al, 2017; Ross and Yan, 2015), discouraging private partners’ efficiency gain motivations. In this particular situation, regulatory agencies can be positive actors if the regulatory institutional settings allow it (De Witte and Marques, 2010).…”

“…Such events can lead to negotiations between politicians and private partners (Campos-Alba et al, 2017), which might not safeguard citizens’ rights. In such circumstances, it is necessary to require an active “public attorney” that can safeguard public interests while reducing vested interests (Van Marrewijk et al, 2008).…”

Contract Renewal in Urban Water Services, Incumbent Advantage, and Market Concentration

“…Existing research suggests that the renewal of public service contracts largely depends on the type of service concerned, with the incumbent's contract more likely to be renewed for more complex services (Brown and Potoski 2003;Rodrigues, Tavares, and Araújo 2012) such as urban water services and waste disposal (Campos-Alba et al 2017;Guérin-Schneider, Breuil, and Lupton 2014).…”