International Review of Waste Management Policy - Department of ...

3.0 Competition in the Market for Waste Collection
Some Irish local authorities moved away from providing household waste
management services in the mid 1990’s following the introduction of the Waste
Management Act 1996. The market for waste services then opened for competition
with the local authorities effectively determining who could compete in the collection
market (and through providing which service) through their role in issuing waste
collection permits. The OECD discusses the appropriate approach to competition. 60 It
suggests there are two categories of competition which could be considered in the
context of the Irish market:
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1) Competition in the market; and
2) Competition for the market.
3.1 Definitions
3.1.1 Competition in the Market
This can be viewed as a standard free market approach to service provision. The ideal
free market approach consists of removing all trade barriers thus letting the market
and competitors within the market adjust to the equilibrium, or most efficient, level of
participation. To develop the aims of central government regarding waste, a certain
level of regulation will exist in the market. Householders choose to contract
individually with a waste collection company (or not, as the case may be).
There has been, in the context of the existing situation in Ireland some discussion as
to the need, or otherwise, for a regulator in the market. 61
3.1.2 Competition for the Market
This relates to competition for a contract to be responsible for waste management for
a specific geographic region. This occurs through periodic tendering processes, in
which companies bid for time-limited monopolies over service provision. Through the
tendering process, costs of the underlying service are revealed. Key to obtaining value
for money is the design of the tendering process itself. There is a considerable body
of literature regarding the economics of contracts, and the likely behaviour of
participants in bidding situations. 62 In practice, there is also a variety of experience
with tendering processes.
60 OECD (2000) Competition in Local Services: Solid Waste Management, DAFFE/CLP(2000)13
61 DoEHLG (2006) Regulation of the Waste Management Sector: Consultation Paper,
http://www.environ.ie/en/Publications/Environment/Waste/WasteManagement/FileDownLoad,1446,
en.pdf
62 See, for example, J-J. Lafont (1989) The Economics of Uncertainty and Information, Cambridge: MIT
Press; J-J. Lafont and J. Tirole (1993) A Theory of Incentives in Procurement and Regulation,
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