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

Published date01 December 2017
AuthorSara Blåka
Date01 December 2017
DOIhttp://doi.org/10.1111/padm.12356
ORIGINAL ARTICLE
Does cooperation affect service delivery costs?
Evidence from fire services in Norway
Sara Blåka
Department of Political Science and
Management, University of Agder,
Kristiansand, Norway
Correspondence
Sara Blåka, Department of Political Science
and Management, University of Agder,
Gimlemoen 25A, Kristiansand 4604, Norway.
Email: sara.blaka@uia.no
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 exist-
ing 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 dif-
ferently; and (3) we analyse how the number of cooperation part-
ners affects the cooperationcost 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 organiza-
tions. Furthermore, cost benefits decrease significantly as the
number of cooperation partners increases, and more so for con-
tractual agreements than for joint organizations.
1|INTRODUCTION
Local authorities in Europe play a central role as providers of public services. Over recent decades, these
authorities have also faced higher requirements to produce cost-effective and high-quality services due to
both political and economic pressure (Hulst and Montfort 2007b; Hulst et al. 2009). Meeting these demands
has been a challenge, especially for the many small municipalities in most European countries, as they struggle
with factors such as small-scale economies and attracting high competence personnel (Hulst and Montfort
2007a). One common solution to these problems is to increase municipality size through amalgamations,
although empirical studies show mixed results for their effect on service delivery costs (Bish 2001; Carr and
Feiock 2004; Dollery and Johnson 2005; Fox and Gurley 2006; Holzer and Fry 2011; Blom-Hansen
et al. 2014; Bel and Warner 2015, p. 52). Another proposed policy option is privatization or outsourcing of
public service delivery. Here, as well, the results from empirical research are mixed, as many small municipali-
ties find that increasing transaction costs outweigh efficiency gains in the production of services (Bel and Mir-
alles 2003; Bel and Warner 2015, p. 55).
DOI: 10.1111/padm.12356
1092 © 2017 John Wiley & Sons Ltd wileyonlinelibrary.com/journal/padm Public Administration. 2017;95:10921106.

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