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Municipal annexation and local monopoly power

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  • Rodolfo Gonzalez
  • Stephen Mehay
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    Abstract

    We have found that the fiscal power of a city can be increased by extension of its borders within a land area that is homogeneous with respect to earning opportunities, even when numerous rival jurisdictions exist in the area. We hypothesized that extending municipal boundaries will have a positive effect on discretionary outlays and on expenditures per capita. The evidence presented supports these hypotheses. Furthermore, municipal wages appear to be significantly increased in cities experiencing annexation growth. Therefore, we would expect to find that municipal employees are more inclined to favor annexation than the rest of the electorate. From a policy standpoint, this study suggests that significant perverse effects on fiscal efficiency may follow adoption of legal reforms that facilitate the ability of municipalities to extend their borders, or that restrict the formation of new municipalities. Copyright Martinus Nijhoff Publishers 1987

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    Bibliographic Info

    Article provided by Springer in its journal Public Choice.

    Volume (Year): 52 (1987)
    Issue (Month): 3 (January)
    Pages: 245-255

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    Handle: RePEc:kap:pubcho:v:52:y:1987:i:3:p:245-255

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    Web page: http://www.springerlink.com/link.asp?id=100332

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    1. Romer, Thomas & Rosenthal, Howard, 1979. "The elusive median voter," Journal of Public Economics, Elsevier, vol. 12(2), pages 143-170, October.
    2. Bartel, Ann & Lewin, David, 1981. "Wages and Unionism in the Public Sector: The Case of Police," The Review of Economics and Statistics, MIT Press, vol. 63(1), pages 53-59, February.
    3. Rodolfo Gonzalez & Stephen Mehay, 1985. "Bureaucracy and the divisibility of local public output," Public Choice, Springer, vol. 45(1), pages 89-101, January.
    4. Stephen Mehay, 1981. "The expenditure effects of municipal annexation," Public Choice, Springer, vol. 36(1), pages 53-62, January.
    5. Filer, John E & Kenny, Lawrence W, 1980. "Voter Reaction to City-County Consolidation Referenda," Journal of Law and Economics, University of Chicago Press, vol. 23(1), pages 179-90, April.
    6. 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.
    7. Wagner, Richard E & Weber, Warren E, 1975. "Competition, Monopoly, and the Organization of Government in Metropolitan Areas," Journal of Law and Economics, University of Chicago Press, vol. 18(3), pages 661-84, December.
    8. Gordon Tullock, 1974. "Dynamic hypothesis on bureaucracy," Public Choice, Springer, vol. 19(1), pages 127-131, September.
    9. Smith, Sharon P., 1977. "Government wage differentials," Journal of Urban Economics, Elsevier, vol. 4(3), pages 248-271, July.
    10. Epple, Dennis & Zelenitz, Allan, 1981. "The Implications of Competition among Jurisdictions: Does Tiebout Need Politics?," Journal of Political Economy, University of Chicago Press, vol. 89(6), pages 1197-1217, December.
    11. Dolores Martin & Richard McKenzie, 1975. "Bureaucratic profits, migration costs, and the consolidation of local government," Public Choice, Springer, vol. 23(1), pages 95-100, September.
    12. Bernard Lentz, 1981. "Political and economic determinants of county government pay," Public Choice, Springer, vol. 36(2), pages 253-271, January.
    13. 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.
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