The anatomy of choice: an analysis of the determinants of local service delivery in Poland

Abstract

The aim of the paper is to identify the factors determining the choice between service delivery modes to provide local services. The original choice model proposed by Ferris and Graddy predicts that local officials seek to minimise service delivery costs (production and transaction costs), subject to political and fiscal constraints. The article tests production efficiency and transaction costs hypotheses in relation to the modes of service delivery adopted by local governments in Poland: in-house, corporatisation, cooperation, contracting out. It explores delivery choices of three different services: water supply, local transportation, and home care for elderly people. Based on the results of a nationwide survey addressed to all municipalities we test the aforementioned hypotheses using multinomial logit regression models. The empirical evidence confirms the basic expectations that the externalisation of service delivery is a function of local officials’ attempt to minimise the sum of production and transaction costs subject to fiscal and political constraints.