Alternative Methods of Service Delivery in Small and Rural Municipalities


Robert Mohr is an associate professor of economics at the University of New Hampshire. His research focuses on innovation and the adoption of technology and management practices, with an emphasis on environmental policy. His research includes contributions to the Journal of Environmental Economics and Management, Land Economics, and the Industrial and Labor Relations Review. He teaches graduate courses in microeconomic theory and public finance and undergraduate courses in microeconomics, public policy, and environmental economics.

Steven C. Deller is a professor of agricultural and applied economics at the University of Wisconsin–Madison and an extension community development economist. His work focuses on rural economic development policy, including how the structure and fiscal policies of local governments influence local economic growth and development. His most recent book is Targeting Regional Economic Development.

John M. Halstead is a professor of environmental and resource economics and chair of the Department of Natural Resources and the Environment at the University of New Hampshire. His research focuses on regional and rural economic development, and environmental economics. Areas of special interest include solid waste management and the valuation of ecosystem services.


Data from approximately 1,000 small, mostly rural municipalities in Illinois, New Hampshire, and Wisconsin address local choices on production and contracting arrangements for a wide range of services. The results suggest that the use of both for-profit contractors and cooperative agreements with other governments correlate negatively with population size. Small municipalities are less likely to use competitive bidding processes, compare costs between production options, or report that privatization produces savings. Median income, rural geography, and ideology show statistically significant associations with contracting decisions. Respondents generally consider themselves “satisfied” with services provided by contract, although satisfaction levels are lower than those associated with self-provision of the same services. Citizen satisfaction associated with services delivered by other governments is lower than those provided by private contractors, suggesting that no trade-off in service quality is directly attributable to for-profit contractors.