Market structure of urban solid waste. Different models, different results

Abstract

The urban waste services in Portugal have been, historically, provided together with other services, such as water services. Despite the lack of discussion on this subject in the literature, some questions have been raised about the gains, in terms of efficiency, of this policy. Following a recent and robust partial nonparametric frontier model, based on order‐α, we intend to evaluate the presence of economies of scope and scale in the Portuguese waste sector. The results show the absence of economies of scope between waste and water (and wastewater) services. In addition, we identify the presence of economies of scale in smaller municipalities, suggesting that cooperation (or amalgamation) between these municipalities could lead to cost savings. These outcomes might be useful for policy and decisionmakers in further reforms.