A Comparative Study of the Effects of Institutional Arrangements in Municipal Solid Waste Services in Korea

Fixing big government or feeding private contractors? Empirical evidence from the case of municipal solid waste management

“…Although not empirically tested, some scholars contend that in Korea, local governments usually contract out garbage collection for the period of 1–3 years, but when the contract term expires, instead of going through a competitive bidding process, they tend to simply renew the contract, enabling contractors to raise service prices over time (Bae, 2010; Kim, 2010). Therefore, the same private contractors hold contracts for a long period of time because the competitive tendering system is often replaced by collusive tendering (Jeong et al., 2017; Kwon, 2012). From the perspective of relational contracting, such a long‐term relationship between the government and contractors is expected to increase trust and lower transaction costs (Bertelli & Smith, 2009).…”

“…In a more extensive study, using data for 156 local governments over a period of 10 years, Jeong et al. (2017) concluded that private contracting out in waste treatment in Korea did not lead to cost savings vis‐à‐vis public service provision. Efficiency and productivity were higher under direct public service provision compared to contracting out.…”