Market concentration of a public service is one of the factors influencing the risks associated with contracting out as one of its delivery arrangements, as described by the principal-agent theory. A monopoly of the service producer (the agent) creates room for enforcing the producer’s own interests but not those of a service provider (the principal), whose interest is to provide a public service effectively. Market concentration, therefore, affects the effectiveness of contracting out services and motivates the internalization of services. In the case of local public services, a trend of remunicipalization is visible. The study aims to identify the market concentration of waste collection and disposal services as a factor affecting the cost-effectiveness of contracting out and contract management quality in the environment of Slovak municipalities. Market concentration is analyzed through a market concentration index, in this case, the Herfindahl-Hirschman index. The findings of this study confirm the existence of a high market concentration of the service and show the possible solution for the remunicipalization of services through inter-municipal cooperation. However, some barriers in inter-municipal cooperation implementation were also identified.