Summary and conclusions
The empirical results of this paper are derived from a monopoly view of local government decisionmaking in contrast to the competitive view offered by earlier researchers. That our results are similar to earlier findings lends additional support to the conclusion that local output is largely private in nature. Other than park and recreation services, there appear to be no economies in consumption for local services, nor any economies of density. Larger cities do not appear to be more efficient than smaller cities.10 Of course, this result holds only for the sample of cities used here and does not rule out scale economies for communities smaller than those in our sample (i.e., below 25,000 population).
The pure public goods case is frequently cited as a justification for the provision of many services by local government, and for increasing the size and reducing the number of local jurisdictions. Therefore, it is noteworthy that empirical tests derived from models that have employed differing assumptions about the monopoly power of local government have found little evidence to support these arguments for consolidating local government.
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The authors would like to thank Thayer Watkins, Roger Folsom, Geoffrey Nunn and Randy Eberts for valuable comments. We would also like to thank the Earhart Foundation for financial assistance.
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Gonzalez, R.A., Mehay, S.L. Bureaucracy and the divisibility of local public output. Public Choice 45, 89–101 (1985). https://doi.org/10.1007/BF00163589
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DOI: https://doi.org/10.1007/BF00163589