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Political entrepreneurship and the formation of special districts


  • Alexander Fink


  • Richard Wagner



Where general purpose governments provide a bundle of services within their boundaries, special district governments provide specific services inside the boundaries of general purpose governments. The alternative to forming a special purpose government is providing the service within a general purpose government. Formation of a special district represents the establishment of a new political enterprise, in contrast to the addition of a new product line to an existing government. We explore the formation of special districts as a particular form of the universal entrepreneurial search for gain or profit from exchange. Political entrepreneurship, like market entrepreneurship, operates inside some framework of rules, and the formation of special districts reflects the search for political gain within that framework of rules. We use an entrepreneurial framework to formulate several hypotheses concerning the formation and organization of special districts. Copyright Springer Science+Business Media, LLC 2013

Suggested Citation

  • Alexander Fink & Richard Wagner, 2013. "Political entrepreneurship and the formation of special districts," European Journal of Law and Economics, Springer, vol. 35(3), pages 427-439, June.
  • Handle: RePEc:kap:ejlwec:v:35:y:2013:i:3:p:427-439 DOI: 10.1007/s10657-010-9216-5

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    References listed on IDEAS

    1. Austin, D. Andrew, 1998. "A positive model of special district formation," Regional Science and Urban Economics, Elsevier, vol. 28(1), pages 103-122, January.
    2. repec:cup:apsrev:v:55:y:1961:i:04:p:831-842_12 is not listed on IDEAS
    3. Shadbegian, Ronald J., 1999. "The Effect of Tax and Expenditure Limitations on the Revenue Structure of Local Government, 1962-87," National Tax Journal, National Tax Association, vol. 52(n. 2), pages 221-38, June.
    4. János Kornai, 2014. "The soft budget constraint," Acta Oeconomica, Akadémiai Kiadó, Hungary, vol. 64(supplemen), pages 25-79, November.
    5. Frey, Bruno S. & Eichenberger, Reiner, 1996. "FOCJ: Competitive governments for Europe," International Review of Law and Economics, Elsevier, vol. 16(3), pages 315-327, September.
    6. James M. Buchanan, 1963. "The Economics of Earmarked Taxes," Journal of Political Economy, University of Chicago Press, vol. 71, pages 457-457.
    7. Pauly, Mark V & Redisch, Michael, 1973. "The Not-For-Profit Hospital as a Physicians' Cooperative," American Economic Review, American Economic Association, vol. 63(1), pages 87-99, March.
    8. Wald, John K. & Long, Michael S., 2007. "The effect of state laws on capital structure," Journal of Financial Economics, Elsevier, vol. 83(2), pages 297-319, February.
    9. Wagner, Richard E & Weber, Warren E, 1975. "Competition, Monopoly, and the Organization of Government in Metropolitan Areas," Journal of Law and Economics, University of Chicago Press, vol. 18(3), pages 661-684, December.
    10. repec:mes:jeciss:v:30:y:1996:i:4:p:1212-1216 is not listed on IDEAS
    11. Shadbegian, Ronald J., 1999. "The Effect of Tax and Expenditure Limitations on the Revenue Structure of Local Government, 1962-87," National Tax Journal, National Tax Association, vol. 52(2), pages 221-238, June.
    12. Dick Ruiter, 2005. "Is Transaction Cost Economics Applicable to Public Governance?," European Journal of Law and Economics, Springer, vol. 20(3), pages 287-303, November.
    13. Romano, Roberta, 1985. "Law as a Product: Some Pieces of the Incorporation Puzzle," Journal of Law, Economics, and Organization, Oxford University Press, vol. 1(2), pages 225-283, Fall.
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    1. repec:spr:ecogov:v:19:y:2018:i:1:d:10.1007_s10101-017-0198-4 is not listed on IDEAS

    More about this item


    Special districts; Political entrepreneurship; Public enterprise; Public–private interaction; Enterprise-based public finance; Constitutional political economy; D72; H11; H71; L32;

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • L32 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Enterprises; Public-Private Enterprises


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