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The Risks of Intuition: Size, Costs and Economies of Scale in Local Government

Listed author(s):
  • Mark Callanan

    (Institute of Public Administration, Dublin, Ireland)

  • Ronan Murphy

    (Local Government Researcher)

  • Aodh Quinlivan

    (University College Cork; Ireland)

Registered author(s):

    Extensive international research surrounds the optimal size of local government and associated issues of amalgamations and economies of scale in local government. Given recent structural reforms of Irish local government, this paper examines both the theoretical debates on these issues and the international experience with local authority mergers in several countries, highlighting the rationale for and some of the reported effects of mergers. It also assesses the relationship between size and expenditure/service levels in Irish local government, drawing on available data. Contrary perhaps to popular belief, county and city councils, the primary units of local government in Ireland, are already very large by international standards. Overall, the research suggests a weak link between size and costs, and that local authority mergers may have limited intrinsic efficiency value and can involve considerable transitional costs. Most local authority services appear to possess limited economies of scale, the main exceptions being specialised services, the production costs of capital-intensive services, and some administrative overheads and "back office" functions.

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    File URL: http://www.esr.ie/article/download/186/91/186-558-1-PB.pdf
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    Article provided by Economic and Social Studies in its journal Economic and Social Review.

    Volume (Year): 45 (2014)
    Issue (Month): 3 ()
    Pages: 371-403

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    Handle: RePEc:eso:journl:v:45:y:2014:i:3:p:371-403
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    1. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64, pages 416-416.
    2. Michael Chisholm, 2010. "Emerging realities of local government reorganization," Public Money & Management, Taylor & Francis Journals, vol. 30(3), pages 143-150, May.
    3. David N King & Yue Ma, 2000. "Local authority size in theory and practice," Environment and Planning C: Government and Policy, Pion Ltd, London, vol. 18(3), pages 255-270, June.
    4. Christopher Pollitt, 2009. "Structural change and public service performance: international lessons?," Public Money & Management, Taylor & Francis Journals, vol. 29(5), pages 285-291, September.
    5. Howard Elcock & John Fenwick & Janice McMillan, 2010. "The reorganization addiction in local government: unitary councils for England," Public Money & Management, Taylor & Francis Journals, vol. 30(6), pages 331-338, November.
    6. Special Group on Public Service Numbers & Colm McCarthy & Donal McNally & Pat McLaughlin & Maurice O'Connell & William Slattery & Mary Walsh, 2009. "Report of the Special Group on Public Service Numbers and Expenditure Programmes," Open Access publications 10197/1257, School of Economics, University College Dublin.
    7. D N King, 1994. "A Model of Optimum Local Authority Size," Working Papers Series 94/1, University of Stirling, Division of Economics.
    8. repec:cup:apsrev:v:105:y:2011:i:02:p:238-258_00 is not listed on IDEAS
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