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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.

Suggested Citation

  • Buettner, Thiess & Holm-Hadulla, Fédéric, 2013. "City size and the demand for local public goods," Regional Science and Urban Economics, Elsevier, vol. 43(1), pages 16-21.
    • Handle: RePEc:eee:regeco:v:43:y:2013:i:1:p:16-21
    DOI: 10.1016/j.regsciurbeco.2012.10.003
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    References listed on IDEAS

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    Cited by:

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    3. Baten, Jörg & Keywood, Thomas & Wamser, Georg, 2021. "Territorial state capacity and elite violence from the 6th to the 19th century," European Journal of Political Economy, Elsevier, vol. 70(C).
    4. Allers, Maarten & Geertsema, Bieuwe, 2014. "The effects of local government amalgamation on public spending and service levels," Research Report 14019-EEF, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
    5. Rodríguez-Pose, Andrés & Tselios, Vassilis, 2022. "Can decentralisation help address poverty and social exclusion in Europe?," CEPR Discussion Papers 17471, C.E.P.R. Discussion Papers.
    6. Kauder, Björn & Björn, Kauder & Niklas, Potrafke & Markus, Reischmann, 2016. "Do politicians gratify core supporters? Evidence from a discretionary grant program," VfS Annual Conference 2016 (Augsburg): Demographic Change 145509, Verein für Socialpolitik / German Economic Association.
    7. Blesse, Sebastian & Baskaran, Thushyanthan, 2013. "Do municipal mergers result in scale economies? Evidence from a German federal state," University of Göttingen Working Papers in Economics 176, University of Goettingen, Department of Economics.
    8. Kauder, Björn & Potrafke, Niklas & Reischmann, Markus, 2016. "Do politicians reward core supporters? Evidence from a discretionary grant program," European Journal of Political Economy, Elsevier, vol. 45(C), pages 39-56.
    9. Markus Reischmann, 2016. "Empirical Studies on Public Debt and Fiscal Transfers," ifo Beiträge zur Wirtschaftsforschung, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 63.
    10. Holm-Hadulla, Fédéric, 2020. "Fiscal equalization and the tax structure," Regional Science and Urban Economics, Elsevier, vol. 81(C).

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    More about this item

    Keywords

    Local public goods; Congestion; Population size; Fiscal need;
    All these keywords.

    JEL classification:

    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • R51 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Finance in Urban and Rural Economies
    • H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects

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