Business models for municipal waste management: An economic comparison based on social welfare and economies of scale

Purpose Cost-effective and high-quality waste management services contribute to social wellbeing. Based on empirical data, we compare economies of scale and scope and test them according to alternative scenarios based on service size. Design/methodology/approach The drivers of municipal solid waste management costs are analysed to test the impact of scale and scope municipal waste management service on the average cost. Findings On average as the size of the service increases by 1%, the average cost of providing the municipal solid waste management service decreases by 0.46%. This trend is supported using subsets defined according to the quantity of waste managed. When the scale of the service is sufficiently complex, as in the case study analysed in this paper, economies of scale and scope emerge due to operational factors and transaction costs. Practical implications The provision of public services of economic interest should be based on free market rules and fair competition shall be favoured wherever possible and to the extent that social surplus is produced. However, this principle must not be pursued to the detriment of the efficiency of service delivery, which may bring potentially negative implications for citizens’ wellbeing. Originality This paper presents an original research methodology for developing comparative analyses of waste management service efficiency in urban areas and provides evidence using alternative measures of costs according to the phase of the waste management chain, the scale, and ultimately the scope of municipal solid waste management services.