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City size and the demand for local public goods

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  • Buettner, Thiess
  • Holm-Hadulla, Fédéric

Abstract

This paper studies how size-induced cost differences in the provision of local public goods affect the efficient level of public spending. Since public goods are non-rival in consumption, the per-capita cost of a given level of public good provision is lower in more populous jurisdictions. We show that this cost advantage gives rise to a substitution of public for private consumption and specify conditions under which the efficient level of local public expenditures per capita rises with a jurisdiction's population size.

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Bibliographic Info

Article provided by Elsevier in its journal Regional Science and Urban Economics.

Volume (Year): 43 (2013)
Issue (Month): 1 ()
Pages: 16-21

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Handle: RePEc:eee:regeco:v:43:y:2013:i:1:p:16-21

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Web page: http://www.elsevier.com/locate/regec

Related research

Keywords: Local public goods; Congestion; Population size; Fiscal need;

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References

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  1. Thiess Buettner & Fédéric Holm-Hadulla, 2008. "Fiscal Equalization: The Case of German Municipalities," CESifo DICE Report, Ifo Institute for Economic Research at the University of Munich, vol. 6(1), pages 16-20, 04.
  2. Fenge, Robert & Meier, Volker, 2002. "Why cities should not be subsidized," Journal of Urban Economics, Elsevier, vol. 52(3), pages 433-447, November.
  3. Alberto F. Ades & Edward L. Glaeser, 1994. "Trade and Circuses: Explaining Urban Giants," NBER Working Papers 4715, National Bureau of Economic Research, Inc.
  4. Edward L. Glaeser & Bruce Sacerdote, 1996. "Why is There More Crime in Cities?," Harvard Institute of Economic Research Working Papers 1746, Harvard - Institute of Economic Research.
  5. Brueckner, Jan K., 1982. "A test for allocative efficiency in the local public sector," Journal of Public Economics, Elsevier, vol. 19(3), pages 311-331, December.
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  7. David Nellor, 1984. "Public bureau budgets and jurisdiction size: An empirical note," Public Choice, Springer, vol. 42(2), pages 175-183, January.
  8. Alesina, Alberto & Baqir, Reza & Easterly, William, 2000. "Redistributive Public Employment," Journal of Urban Economics, Elsevier, vol. 48(2), pages 219-241, September.
  9. Craig, Steven G., 1987. "The impact of congestion on local public good production," Journal of Public Economics, Elsevier, vol. 32(3), pages 331-353, April.
  10. Wildasin, David E., 1987. "Theoretical analysis of local public economics," Handbook of Regional and Urban Economics, in: E. S. Mills (ed.), Handbook of Regional and Urban Economics, edition 1, volume 2, chapter 29, pages 1131-1178 Elsevier.
  11. Oates, Wallace E., 1988. "On the measurement of congestion in the provision of local public goods," Journal of Urban Economics, Elsevier, vol. 24(1), pages 85-94, July.
  12. David E. Wildasin, 2004. "The Institutions of Federalism: Toward an Analytical Framework," Public Economics 0403006, EconWPA.
  13. Bergstrom, Theodore C & Goodman, Robert P, 1973. "Private Demands for Public Goods," American Economic Review, American Economic Association, vol. 63(3), pages 280-96, June.
  14. Borcherding, Thomas E & Deacon, Robert T, 1972. "The Demand for the Services of Non-Federal Governments," American Economic Review, American Economic Association, vol. 62(5), pages 891-901, December.
  15. Melville L. McMillan & W. Robert Wilson & Louise M. Arthur, 1981. "The Publicness of Local Public Goods: Evidence from Ontario Municipalities," Canadian Journal of Economics, Canadian Economics Association, vol. 14(4), pages 596-608, November.
  16. Margit Schratzenstaller, 2008. "The New Revenue-sharing Act 2008: Fundamental Act Reform Postponed Again," WIFO Monatsberichte (monthly reports), WIFO, vol. 81(1), pages 35-42, January.
  17. Albert Solé-Ollé & Núria Bosch, 2005. "On the Relationship between Authority Size and the Costs of Providing Local Services: Lessons for the Design of Intergovernmental Transfers in Spain," Public Finance Review, , vol. 33(3), pages 343-384, May.
  18. Edwards, John H. Y., 1990. "Congestion function specification and the "publicness" of local public goods," Journal of Urban Economics, Elsevier, vol. 27(1), pages 80-96, January.
  19. Cogan, John F, 1981. "Fixed Costs and Labor Supply," Econometrica, Econometric Society, vol. 49(4), pages 945-63, June.
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Cited by:
  1. Blesse, Sebastian & Baskaran, Thushyanthan, 2013. "Do municipal mergers result in scale economies? Evidence from a German federal state," Center for European, Governance and Economic Development Research Discussion Papers 176, University of Goettingen, Department of Economics.

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