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Economies of Scale in Local Government: A Theoretical Framework

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  • Fox, William F.

Abstract

A conceptual model is developed for the purpose of providing a framework within which the existence of size economies can be tested. Based on the model the existing size economies literature is shown to be faulty on several counts. First, a simultaneous system of equations is shown to be necessary in order to test for size economies though most previous literature uses a single equation approach. Second, most previous studies have ignored capital costs which results in estimates of short run rather than long run cost curves. Also, the paper notes that care must be taken in application of size economies research to policy questions

Suggested Citation

  • Fox, William F., 1978. "Economies of Scale in Local Government: A Theoretical Framework," Economics Statistics and Cooperative Services (ESCS) Reports 329886, United States Department of Agriculture, Economic Research Service.
  • Handle: RePEc:ags:uerscs:329886
    DOI: 10.22004/ag.econ.329886
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    References listed on IDEAS

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    1. Hambor, John C & Phillips, Llad & Votey, Harold L, Jr, 1973. "Optimal Community Educational Attainment: A Simultaneous Equation Approach," The Review of Economics and Statistics, MIT Press, vol. 55(1), pages 98-103, February.
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