An Empirical Comparison of Government and Private Production Efficiency

To compare governmental versus private production efficiency, this paper estimates production functions for public and private collection of garbage in various Montana municipalities on the basis of data obtained from 27 collectors. Functions of the Leontief form provided the best fits. With respect to labor, public collection was more efficient at all output levels. With respect to capital, the public sector was less efficient at low output scales and more efficient at higher scales of output. Deriving cost functions from the production functions indicated public collection to be more efficient than private collection in communities with population exceeding approximately 1,750.