The costs of corporatization: Analysing the effects of forms of governance

Abstract

Public corporations have been constantly in the spotlight, with some commentators arguing that they can help governments provide better public services, and others insisting that their governance is simply too complex. Despite this ongoing debate, few studies have researched public corporation performance. The present study offers empirical evidence of the effects of various forms of corporatization on public service costs. In particular, it examines public service costs incurred under four different forms of governance: public agencies, public corporations, mixed public corporations with minority public ownership, and mixed public corporations with majority public ownership. The analysis considers eight types of public services in 874 Spanish municipalities between 2014 and 2017. The empirical results show that services provided by public corporations are no less costly than those provided by public agencies. In fact, the services offered by mixed corporations with government majorities tend to cost more than those provided by public agencies.