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Municipal annexation and local monopoly power

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  • Rodolfo Gonzalez
  • Stephen Mehay

Abstract

We have found that the fiscal power of a city can be increased by extension of its borders within a land area that is homogeneous with respect to earning opportunities, even when numerous rival jurisdictions exist in the area. We hypothesized that extending municipal boundaries will have a positive effect on discretionary outlays and on expenditures per capita. The evidence presented supports these hypotheses. Furthermore, municipal wages appear to be significantly increased in cities experiencing annexation growth. Therefore, we would expect to find that municipal employees are more inclined to favor annexation than the rest of the electorate. From a policy standpoint, this study suggests that significant perverse effects on fiscal efficiency may follow adoption of legal reforms that facilitate the ability of municipalities to extend their borders, or that restrict the formation of new municipalities. Copyright Martinus Nijhoff Publishers 1987

Suggested Citation

  • Rodolfo Gonzalez & Stephen Mehay, 1987. "Municipal annexation and local monopoly power," Public Choice, Springer, vol. 52(3), pages 245-255, January.
    • Handle: RePEc:kap:pubcho:v:52:y:1987:i:3:p:245-255
    DOI: 10.1007/BF00116707
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    Cited by:

    1. Alexander Eck & Carolin Fritzsche & Jan Kluge & Joachim Ragnitz & Felix Rösel, 2015. "Fiscal Capacity and Determining Structural Characteristics of the Eastern German Laender," ifo Dresden Studien, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 76, July.
    2. Pengju Zhang & Phuong Nguyen‐Hoang & Na Chen, 2022. "The impact of home rule on municipal boundary and fiscal expansion: Evidence from Texas," Journal of Regional Science, Wiley Blackwell, vol. 62(5), pages 1442-1466, November.
    3. Agrawal, Sandeep & Gretzinger, Cody & Lowerre, Andrew, 2022. "Trends, motivations, and land use outcomes of municipal annexation: A case of Alberta, Canada," Land Use Policy, Elsevier, vol. 112(C).
    4. Russell M. Smith & Whitney B. Afonso, 2016. "Fiscal Impact of Annexation Methodology on Municipal Finances in North Carolina," Growth and Change, Wiley Blackwell, vol. 47(4), pages 664-681, December.
    5. Chris Mothorpe & W. William Woolsey & Russell S. Sobel, 2021. "Do political motivations and strategic considerations influence municipal annexation patterns?," Public Choice, Springer, vol. 188(3), pages 385-405, September.
    6. John Meligrana, 2007. "Testing the Elastic-Cities Concept within a Nonmetropolitan Environment: Evidence from British Columbia, Canada, 1971 to 2001," Environment and Planning A, , vol. 39(3), pages 700-727, March.

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