Overlapping jurisdictions and demand for local public services: does spatial heterogeneity matter?
AbstractThis paper aims to test the existence of vertical interactions in terms of public spending between overlapping local jurisdictions in France using a data set of 110 French municipalities and their corresponding departments in 2001 and 2005. To do so, we consider that demand for municipal services is conditioned by the services provided by departments. We then estimate two specifications which allow spatial heterogeneity to be modeled and which are compared with a simple spatial error specification (without spatial heterogeneity). The two estimated spatial regimes models are able to eradicate spatial autocorrelation in the error term. The estimation results show that an appropriate consideration of spatial heterogeneity can lead to new insights. The spatial error specification reveals a robust complementary demand relationship between services provided by departmental and municipal governments. However, these results are not in accord with the results produced by the spatial regime models, which provide evidence of heterogeneity with independence, complementarity or substitution between the services offered by the two overlapping jurisdictions.
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Bibliographic InfoPaper provided by Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS in its series Economics Working Paper Archive (University of Rennes 1 & University of Caen) with number 201213.
Date of creation: Feb 2012
Date of revision:
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Postal: CREM (UMR CNRS 6211) - Faculty of Economics, 7 place Hoche, 35065 Rennes Cedex - France
Find related papers by JEL classification:
- C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
- H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
- H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-03-14 (All new papers)
- NEP-GEO-2012-03-14 (Economic Geography)
- NEP-URE-2012-03-14 (Urban & Real Estate Economics)
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