Government choice between contract termination and contract expiration in re-municipalization: a case of historical recurrence?
| Author | Daniel Albalate,Germà Bel,Eoin Reeves |
| DOI | 10.1177/00208523211002608 |
| Published date | 01 September 2021 |
| Date | 01 September 2021 |
Article
International
Review of
Administrative
Sciences
Government choice
between contract
termination and
contract expiration
in re-municipalization:
a case of historical
recurrence?
Daniel Albalate
Universitat de Barcelona, Spain
Germa
`Bel
Universitat de Barcelona, Spain
Eoin Reeves
University of Limerick, Ireland
Abstract
Since the early 2000s, the terms ‘re-municipalization’ and ‘reverse privatization’ entered
the lexicon as several examples emerged of governments taking ownership of assets
and services that had previously been privatized or outsourced. Various methods are
used to implement re-municipalization decisions and differences are observed across
countries and sectors. The approaches most frequently adopted are re-municipalization
through contract termination and contract expiration. We utilize a wide database of
re-municipalizations worldwide to analyse the factors that influence governments’
choice between these two approaches. The results from our multivariate analysis
find a pattern of historical recurrence in the characteristics of the current
re-municipalization process.
Corresponding author:
Germa
`Bel, Universitat de Barcelona, Econometrics, Statistics and Applied Economics, John Maynard Keynes
1-11, Barcelona, 08034, Spain.
Email: gbel@ub.edu
International Review of Administrative
Sciences
!The Author(s) 2021
Article reuse guidelines:
sagepub.com/journals-permissions
DOI: 10.1177/00208523211002608
journals.sagepub.com/home/ras
2021, Vol.87(3)461–479
Points for practitioners
Most governments wait for contracts to expire but the number of contract termina-
tions is sizeable. Re-municipalization in larger cities, network sectors (particularly
water) and implemented by municipal governments have a positive association with ter-
mination. Re-municipalization of energy utilities and conducted in countries of French
legal origin is positively associated withcontract expiration. Patterns of contemporary re-
municipalization closely resemble those witnessed in the ‘Progressive Era’.
Keywords
contracts, expiration, expropriation, privatization, re-municipalization
Introduction
1
The provision of local public services is undergoing substantial change. Whereas
reforms such as privatization and marketization dominated the last quarter of the
20th century, alternative reforms such as inter-municipal cooperation (Bel and
Seb}
o, 2021) and corporatization of public services (Andrews et al., 2020) have
gained prominence since the turn of the century. Re-municipalization has also
become widespread, in both developed and developing countries, and in
different service sectors. Following pioneering studies by Hefetz and Warner
(2004, 2007), an increasing number of multivariate empirical studies have recently
analysed the drivers of re-municipalization (Chong et al., 2015; Campos-Alba
et al., 2020; Gradus and Budding, 2020; Albalate and Bel, 2020; Gradus et al.,
2019; Schoute et al., 2020; Warner and Aldag, 2019).
In a recent study, Albalate et al. (2021) analysed factors that influence whether
the re-municipalization decision is actually implemented, and the time taken to
complete implementation. However, studies into aspects of the implementation of
re-municipalization policies that follow adoption decisions are still extremely
scarce. This article addresses this gap in the literature by analysing the choice
between contract termination (which often involves expropriation of assets) and
contract expiration, when re-municipalization is implemented. Implementing re-
municipalization can be expensive if governments are required to compensate
investors for private property they expropriate. In addition, the costs of negotiat-
ing the termination of contracts are likely to be high. Governments are therefore
incentivized to wait for contracts to expire if they choose to re-municipalize.
However, the most recent international data on re-municipalization indicate that
the number of re-municipalizations by contract termination is appreciable. This
raises the question we seek to address in this article: what determines whether re-
municipalization follows contract termination or expiration?
462 International Review of Administrative Sciences 87(3)
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