Economic effects of contracting out in Scandinavia, and the importance of country context

In this chapter, we examine whether contracting out municipal park and road services in Scandinavia results in different levels of cost changes and whether the factors explaining cost changes differ across national contexts. In a statistical analysis based on comparable survey data, we find that the average cost change from contracting out, and the importance of key explanatory factors, differed significantly across Scandinavia. The average costs of providing the services increased in Norway, remained unchanged in Sweden and decreased in Denmark. The findings for Denmark provide the most consistent support for theoretical explanations for contracting outcomes, while the findings for Norway provide only very limited support for the theories. The chapter contributes to the literature by suggesting that the stage of development and supportiveness of the institutional environment is critical for understanding differences in contracting outcomes, and in the factors explaining cost changes, across different national contexts.