Institutions, Public Administration and Transnational Space
Edited by Jarle Trondal
Chapter 11: Service quality, inter-municipal cooperation and the optimum scale of operation: the case of local fire departments in Norway
Chapter 11 analyzes new joint ventures at the local level. There is a call for studies on how cooperation between local governments affects costs. Is the rise of new institutional formats – which in some cases implies the rise of more sizable political orders – costly or efficient? Do joint ventures produce economies of scale? The main ambition of this chapter is to contribute to fill this void by examining (i) whether inter-municipal cooperation leads to more cost-efficient service delivery than producing services municipally and (ii) whether different forms of cooperation affect cost-efficiency differently. Conceptually these questions tap into the puzzle of whether cooperation promotes scale economies or whether transaction costs exceeds potential scale advantages. The author seeks to answer this by analyzing how cooperation and non-cooperation within Norwegian emergency services affect operating costs. Chapter 11 shows that cooperation, whether it is organized by market principles or joint organizations, is a more costly organizational form than the traditional local hierarchy. How much more costly it is, however, depends on the number of actors involved. This implies that costs related to cooperation exceed potential cost savings provided by economies of scale, and that joint service provision therefore does not solve efficiency problems linked to small-scale entities.
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