The optimal size of territorial units in the outsourcing of waste service: An empirical approach.

This study provides new insights into the relation between the size of the territorial units for which the provision of waste services is entrusted to external operators and their efficiency. The need for a deeper investigation of this relation arises from the fact that on the one hand, the European Union is pushing its Member States towards the adoption of laws aimed at ensuring competition for the market whenever competition in the market is possible; on the other, both the theoretical and the empirical literature cautions policymakers against the risks associated with contracting out. This problem is addressed here through an efficiency analysis of Italian municipalities in the organization of waste services. The stochastic frontier analysis (SFA) is applied to estimate efficiency scores for the municipalities. Then, a regression analysis is carried out to investigate the relation between the efficiency scores and the size of the municipality. This analysis has been carried out using data on a sample of 6,916 Italian municipalities (87.39% of the entire population) for the year 2019. The method adopted here can also support regulatory authorities in defining the size of the territorial units in which other types of local public service should be outsourced.

A methodological proposal to determine the optimal levels of inter-municipal cooperation in the organization of solid waste management systems.

The paper proposes a procedure based on data envelopment analysis (DEA) in order to identify the optimal dimension for inter-municipal cooperation in waste management. Given: (a) a set of decision making units (DMUs) and a production process that virtually transforms municipal expenditure in different amounts of sorted and unsorted waste, (b) a set of exogenous variables conditioning the operational environment of the DMUs and (c) a variable used for measuring the dimension of inter-municipal cooperation, the procedure realizes an iterative correction of input values and efficiency scores to purge, first, the effects of the exogenous variables, and then those of the dimensional variable. In this way, an indicator of the impact of the dimensional variable on the efficiency is obtained for each of the observed DMUs. An application on waste collection services is proposed using data relative to a set of Italian DMUs with a population ranging between 20,000 and 300,000. The results show that DMUs not exceeding the total population of around 55,000 (upper bound of the eighth population decile) provide the best solution for inter-municipal cooperation. Over that level, increases of the population consistently worsen average efficiency (the mean of the impact of the dimensional variable on efficiency scores more than doubles from the eighth to the ninth decile and more than quintuples from the eighth to the last decile). The procedure can be applied to different regional and national contexts and even to inter-municipal cooperation concerning other public services.