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Too Many Municipalities?

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Author Info

  • Dahlby, Bev

    () (University of Alberta, Department of Economics)

Abstract

Does democracy lead to the creation of too many municipalities? We analyze this issue within the context of the Alesina and Spolare (1996) model where the quality of municipal services deteriorates with the distance from the center of a municipality. Individuals can vote in a referendum to split an existing municipality. We show that social welfare will decline when municipalities are split if the level of the public service, as chosen by the median voter, is lower in the new smaller municipalities. In general, the model indicates that there may be a democratic bias in favour of creating too many municipalities.

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Bibliographic Info

Paper provided by University of Alberta, Department of Economics in its series Working Papers with number 2009-18.

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Length: 20 pages
Date of creation: Feb 2009
Date of revision:
Handle: RePEc:ris:albaec:2009_018

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Keywords: median voter model; fiscal federalism; succession; municipal boundaries;

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  1. Bogomolnaia, Anna & Le Breton, Michel & Savvateev, Alexei & Weber, Shlomo, 2005. "Stability of Jurisdiction Structures under the Equal Share and Median Rule," IDEI Working Papers 362, Institut d'Économie Industrielle (IDEI), Toulouse.
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