This article examines the determinants of inter-municipal cooperation in the drinking water sector in France. While the literature highlights the paradoxical effects of inter-municipal cooperation on economies of scale, this contribution offers new insights. Using a comprehensive panel of French water services from 2008 to 2021, we analyze through a Correlated Random Effects/Control Function specification, why municipalities refuse to merge and how they decide to do so. We first show that searching for better pricing and network improvement drives consolidation. However, we limit this result by exhibiting that the legal form chosen to cooperate, imposing varying degrees of freedom on municipalities in governance, impacts the determinants of joining.
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