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Demand for Locally provided Public Services Within the Median Voter`s Framework: The Case of the Brazilian Municipalities

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  • Constantino Cronemberger Mendes
  • Maria da Conceição Sampaio de Sousa
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    Abstract

    Neste estudo, estimou-se a demanda para a despesa pública local nas municipalidadesbrasileiras dentro de uma abordagem do eleitor mediano. O teorema do eleitormediano provê um método de agregação de demandas individuais para obter ademanda comunitária. A razão para o uso dessa abordagem advém do fato de que emsistemas federativos as preferências dos eleitores são mais bem representadas em nívellocal por meio dos consumidores desses serviços, que têm melhor conhecimento doscustos e benefícios das despesas públicas locais. Os resultados sugerem que o impactodo tamanho da cidade na qualidade de bens mostra efeitos de aglomeração entre zero eum. Contudo, o congestionamento marginal diminui com a despesa, resultado estesurpreendente, uma vez que sugere que o efeito congestionamento deve ser maiselevado em cidades grandes. As indivisibilidades que impossibilitam a provisão dedeterminados serviços em cidades pequenas influenciam a concentração de suasprovisões em cidades maiores. As despesas mais elevadas daquelas cidades grandesrefletem não somente um custo de aglomeração, mas também o fato de que essascidades oferecem uma escala maior de serviços. Assim, no Brasil, contrariamente aosresultados tradicionais, o efeito reduzido do congestionamento ao longo das classes dadespesa reflete a predominância dos elementos da escala medidos pelas elasticidadesda população sobre os efeitos do preço. In this paper we estimated the demand for local public spending for the Brazilianmunicipalities within a median voter?s framework. The median voter theorem providesa method of aggregating individual voter`s demands to obtain community demand.The rationale for applying that framework came from the fact that in federal systemsvoter?s preferences are more likely to be reflected at the local level as the consumers ofpublic services have a better knowledge of the benefits and costs of the local publicexpenditures. Results obtained are consistent with the theoretical background thussuggesting that this hypothesis might be useful to describe the demand for local publicgoods in Brazil. In particular, the use of quantile regression permitted to investigate theimpacts of the conditioning variables on local public expenses across differentexpenditures classes thus allowing for heterogeneity across municipalities. Our resultsalso suggest that the impact of the city size on the quality of club goods showscrowding effects as g is between zero and one. However, in the estimated models,marginal congestion slightly decreases with expenditure. This is a rather surprisingresult as one is tempted to conclude that the congestion effect should be higher on bigcities. Yet, a more careful look shows the drawbacks of such interpretation. Theindivisibilities preclude the provision of certain services in small towns, concentratingtheir provision on larger cities. Hence, the higher expenditures of those big cities reflectnot only a crowding cost but also the fact that these towns offer a wide range of serviceswhen compared to the small ones. So, in Brazil, contrary to the traditional results, thereduced congestion effect along the spending classes reflect the predominance of thescale elements measured by the population elasticities over the price effects.

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    Bibliographic Info

    Paper provided by Instituto de Pesquisa Econômica Aplicada - IPEA in its series Discussion Papers with number 1046.

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    Length: 27 pages
    Date of creation: Oct 2004
    Date of revision:
    Handle: RePEc:ipe:ipetds:1046

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    1. Congleton, Roger D & Bennett, Randall W, 1995. " On the Political Economy of State Highway Expenditures: Some Evidence of the Relative Performance of Alternative Public Choice Models," Public Choice, Springer, vol. 84(1-2), pages 1-24, July.
    2. Congleton, Roger D & Shughart, William F, II, 1990. "The Growth of Social Security: Electoral Push or Political Pull?," Economic Inquiry, Western Economic Association International, vol. 28(1), pages 109-32, January.
    3. Yvon Rocaboy & Alain Guengant & Jean-Michel Josselin, 2002. "Effects of club size in the provision of public goods. Network and congestion effects in the case of the French municipalities," Papers in Regional Science, Springer, vol. 81(4), pages 443-460.
    4. Matz Dahlberg & Eva Johansson, 1998. "The revenues-expenditures nexus: panel data evidence from Swedish municipalities," Applied Economics, Taylor & Francis Journals, vol. 30(10), pages 1379-1386.
    5. 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.
    6. Bergstrom, Theodore C & Rubinfeld, Daniel L & Shapiro, Perry, 1982. "Micro-Based Estimates of Demand Functions for Local School Expenditures," Econometrica, Econometric Society, vol. 50(5), pages 1183-1205, September.
    7. Deacon, Robert T, 1978. "A Demand Model for the Local Public Sector," The Review of Economics and Statistics, MIT Press, vol. 60(2), pages 184-92, May.
    8. Maria da Conceição Sampaio de Sousa & Francisco Cribari Neto & Borko Stosic, 2003. "Explaining DEA Technical Efficiency Scores in an Outlier Corrected Environment: the case of Public Services in Brazilian Municipalities," Anais do XXXI Encontro Nacional de Economia [Proceedings of the 31th Brazilian Economics Meeting] d55, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].
    9. Varian, Hal R, 1982. "The Nonparametric Approach to Demand Analysis," Econometrica, Econometric Society, vol. 50(4), pages 945-73, July.
    10. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64, pages 416.
    11. Aronsson, Thomas & Lundberg, Johan & Wikstrom, Magnus, 2000. "The impact of regional public expenditures on the local decision to spend," Regional Science and Urban Economics, Elsevier, vol. 30(2), pages 185-202, March.
    12. 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.
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