The main objective of this work is to examine whether small municipalities can reduce costs through cooperation and delegation. We first examine factors explaining the decision of municipalities to cooperate and delegate service delivery responsibility, in this case residential solid waste services, to another government. Furthermore, we estimate the impact of cooperation on the costs of providing residential solid waste services. The empirical analysis is done using a sample of small Spanish municipalities. Results of the empirical analysis suggest that cooperation is a pragmatic choice for municipalities with a sub-optimal size: municipalities that cooperate by delegating face lower costs for residential solid waste services than those that do not. Furthermore, we find that cooperation allows municipalities to save costs once we control for the form of production and other factors explaining costs.