Evidence of horizontal yardstick competition in the Italian waste sector: Do the type of neighbour and benchmark matter?

This paper investigates whether the spatial interaction patterns observed among Italian provinces in separate waste collection (SWC) over the period 2008–2020 are consistent with horizontal yardstick competition (HYC). Using a two-regime spatial Durbin model—where regimes are defined according to productivity dynamics derived from the components of the Malmquist index—we assess whether provinces tend to imitate better-performing peers and whether such behaviour may depend on the type of neighbour and benchmark considered. The results suggest that patterns consistent with HYC emerge primarily among non-geographical neighbours, indicating that imitation may be driven by information embedded in relative benchmark performance rather than by spatial proximity or target-based regulatory frameworks. Benchmark characteristics appear to play an important role: higher levels of managerial and scale efficiency in benchmark units are associated with stronger imitative behaviour. Additional analyses provide further support for the robustness of these findings. Overall, the study provides new insights into the mechanisms underlying spatial dependence in public service provision and highlights the potential importance of performance transparency in shaping circular economy outcomes within the waste management sector.