Fernet Chabrost, M. “Get what you pay for? The story underneath remunicipalizations in the water sector”

The paper “Get what you pay for? The story underneath remunicipalizations in the water sector” (Fernet Chabrost, M.) will be presented at the 6th Conference on the Regulation of Infrastructures (16 June 2017). 

ABSTRACT

Remunicipalization, especially in the water distribution sector, is a novel and widespread phenomenon disrupting the “make-or-buy” theory. Very little attention has been paid to this change in the landscape of public procurement. We address more widely the question of remunicipalization of water services in France. Gathering information on the 1998-2015 period on how more than 1 200 French municipalities are organizing their water services at contract renewal time, we identified nearly 300 remunicipalization cases. Using an endogenous switching regression model in a two-stage probit estimation we found that the choice of municipalities is driven by expectations concerning price and leak: efficiency consideration are thus important drivers. However we also find evidence of mimetic behaviors suggesting that municipalities that are uniformed or not skilled enough to anticipate the consequence of their choice on efficiency might rely on observed decisions coming from municipalities from the neighborhood.

ABOUT THE AUTHOR

After obtaining her Master degree in economics at Toulouse School of Economics, Marion Fernet Chabrost started to work as an analyst in competition issues in Paris. Then, she has been hired in Boston, MA, for doing a similar job at Analysis Group. She used to work in merger and collusion analysis. As she realized her needed to obtain more expertise in economics, she has decided to start a PhD in Economics at Paris School of Economics. Marion’s area of research is mainly the economics of public procurement and she is currently halfway towards the end of her thesis.