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Spatial regimes in heterogeneous territories: The efficiency of local public spending

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  • Vidoli, Francesco
  • Sacchi, Agnese
  • Carrera, Edgar J. Sanchez

Abstract

We study the impact of spatial heterogeneity on cost efficiency in Italian municipalities, introducing an original method to identify functionally homogeneous territorial areas that differ from existing administrative boundaries. Our method incorporates territorial and geographical dimensions, including latent variables associated with spatial heterogeneity—relevant factors yet often overlooked in previous empirical studies. Using spatial data on road and territory planning services, we identify clusters of municipalities with shared characteristics and measure their relative efficiency within these clusters. Our findings reveal marked territorial disparities in cost efficiency, challenging conventional one-against-all benchmarking methods. Unlike standard approaches that compare each municipality with all others, our method offers a more accurate basis for evaluating municipal performance and informing policy decisions on services to citizens. This contributes to a more effective and equitable allocation of public resources, addressing practical and methodological limitations in the existing literature.

Suggested Citation

  • Vidoli, Francesco & Sacchi, Agnese & Carrera, Edgar J. Sanchez, 2025. "Spatial regimes in heterogeneous territories: The efficiency of local public spending," Economic Modelling, Elsevier, vol. 151(C).
  • Handle: RePEc:eee:ecmode:v:151:y:2025:i:c:s0264999325001348
    DOI: 10.1016/j.econmod.2025.107139
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    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
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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