Efficient scale and scope of business models used in municipal solid waste management

Abstract

Purpose: The paper aims to compare the efficiency of alternative municipal solid waste (MSW) management business models: a single provider against multiple providers. Design/methodology/approach: In this paper the drivers of MSW management costs are analysed to test the impact of the scale and scope of MSW management services on the average cost. While the business-as-usual scenario foresees a single provider, the alternative scenario foresees multiple providers. Findings: Based on the empirical data on municipal waste management costs, on average, the size and the average cost of the service are inversely related. This trend is supported using sub-sets defined by the quantity of waste managed. Multiple factors aid in explaining this result, and among others, due to scale and scope, factors such as transition costs increase with the number of players running different services. Practical implications: The provision of public services of economic interest should favour the participation of more companies wherever possible to the extent that social surplus is produced. However, pursuing this principle to the detriment of efficient service delivery is not ideal. This paper demonstrated that a single-provider waste management business model is efficient under specific conditions, as in this article. Originality/value: This paper presents an original research methodology for comparatively analysing waste management service efficiency in urban areas and provides adequate evidence using alternative measures of costs according to the phase of the waste management chain, the scale and ultimately the scope of MSW management services.