« Let the cat out of the bag » : the rationality behind remunicipalizations

Marion Chabrost, Simon Porcher et Stéphane Saussier

13 juin 2017

IAE de Paris – 12 rue Jean-Antoine de Baïf – Salle D1- 13h30-15h

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 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 wa- ter 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 neighbourhood.

Short bio. Marion is a PhD student at the University Paris 1 Panthéon-Sorbonne and is a member of the chaire EPPP. She obtained a Master degree in Economics from the Toulouse School of Economics in 2014. She used to work as an analyst for MAPP in Paris and for Analysis Group in Boston where she specialised in antitrust and competition. She is now a PhD student under the supervision of Stéphane Saussier and Carine Staropoli. Her research focuses on the public procurement dynamic, in particular on anticompetitive behaviors in public markets.