Municipal waste management as a local utility: Options for competition in an environmentally-regulated industry

In this paper we apply the mainstream theory of regulatory economics to the industry of municipal waste management (MWM) and discuss its potential for further liberalization and competition. We argue that opportunities for developing market-based solutions are indeed present, at least in principle: most stages are suitable for private-sector involvement and satisfy the theoretical requirements for introducing competition in its various forms. On the other hand, this development is slowed down by a number of factors arising from environmental policy, some of which have been justified in the past by the need to boost the supply of disposal facilities and maintain public control over the system. Though not fully incompatible with more competition, many of these factors are still valid today. However, while some observers seem to believe that competitive tendering is the best option for increasing market potential, we believe this is not the case, especially as far as vertically-integrated MWM is concerned. Other strategies, including competition in the market and regulated monopoly, seem more promising.