"get What You Pay For?" the Story Underneath Remunicipalizations in the Water Sector

Marion Chabrost (Université Paris 1 Panthéon Sorbonne)
Simon Porcher (Sorbonne Business School)
Stéphane Saussier (Sorbonne Business School)

Abstract: We adress the question of remunicipalization of water services in France. Gathering information on the 1998-2015 period concerning the way more than 1 200 French municipalities are organizing their water services at contract renewal time, we identified nearly 130 remunicipalization cases. Using an endogenous switching regression model in a two-stage probit estimation we found that the choice of municipalities is driven by expectations concerning price and leak: efficiency consideration are thus important drivers. However we also find evidence of mimetic behaviors suggesting that municipalities that are uniformed or not skilled enough to anticipate the consequence of their choice on efficiency might rely on observed decisions coming from municipalities from the neighborhood. (JEL: H0, H7, K00, L33)