Public Versus Private Provision of Governmental Services: The Case of Danish Fire Protection Services

Abstract

Comparisons of the costs of private and public production of the same service are of interest because governmental services do not have to be produced by public institutions. The production may be contracted out to private companies. The paper presents an empirical analysis of costs of private and public provision of fire protection in Denmark. Strict state regulation of municipal fire protection services makes the costs of public and private production more comparable than is often the case. The findings show substantial cost differences in favour of private production. In the discussion, this difference is primarily attributed to economies of scale and competition from alternative sources of supply related to private production of fire protection services.

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