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Public Versus Private Production. A Study of the Cost of School Cleaning in Denmark



The cleaning of Danish schools is produced by one of three forms of organization: decentral municipal, central municipal or private. The cost function is shown to be well estimated by a trans-log specification of scale and quality of cleaning. For small schools the organization makes little difference. For larger schools decentral municipal production is the most expensive. On average centralization reduces costs by 6%, while privatization reduces costs by 29%. These cost gaps are due to the difference in ability to exploit the economy of scale.

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