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Local Government Cooperation for Joint Provision: The Experiences of Brazil and Spain with Inter-Municipal Consortia

  • Luiz de Mello

    (OECD Economics Department)

  • Santiago Lago-Peñas

    (REDE. IEB, and University of Vigo)

Local governments often set up inter-municipal consortia to provide public services jointly, rather than individually. The main benefits of joint provision include the potential for improved cost-effectiveness arising from gains from economies of scale and the internalisation of costs and/or benefits of provision, which could otherwise spill over inter-municipal borders and discourage provision. To shed further light on this issue, this paper tests for the presence of scale and spillover effects in local government provision and estimates the determinants of the probability of local government participation in inter-municipal consortia in Brazil and Spain. Empirical evidence suggests that in some cases smaller jurisdictions operate at sub-optimal scale and are indeed more likely than their larger counterparts to participate in inter-municipal consortia. In the case of Brazil, governance arrangements between the municipalities and the state governments and/or private-sector providers, but not the federal government, are also associated with a higher probability of participation in inter-municipal consortia, suggesting the presence of “participation spillovers” among governance arrangements.

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File URL: http://icepp.gsu.edu/files/2015/03/ispwp1218.pdf
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Paper provided by International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University in its series International Center for Public Policy Working Paper Series, at AYSPS, GSU with number paper1218.

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Length: 26 pages
Date of creation: 23 Mar 2012
Date of revision:
Handle: RePEc:ays:ispwps:paper1218
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  1. Albert Solé-Ollé & Núria Bosch, 2005. "On the Relationship between Authority Size and the Costs of Providing Local Services: Lessons for the Design of Intergovernmental Transfers in Spain," Public Finance Review, SAGE Publishing, vol. 33(3), pages 343-384, May.
  2. Germà Bel & Xavier Fageda & Melania Mur, 2010. "¿Por qué se privatizan servicios en los municipios (pequeños)? Evidencia empírica sobre residuos sólidos y agua," Hacienda Pública Española, IEF, vol. 192(1), pages 33-58, March.
  3. Rune Sørensen, 2006. "Local government consolidations: The impact of political transaction costs," Public Choice, Springer, vol. 127(1), pages 75-95, April.
  4. Reto Steiner, 2003. "The causes, spread and effects of intermunicipal cooperation and municipal mergers in Switzerland," Public Management Review, Taylor & Francis Journals, vol. 5(4), pages 551-571, December.
  5. Helen F. Ladd, 1992. "Population Growth, Density and the Costs of Providing Public Services," Urban Studies, Urban Studies Journal Limited, vol. 29(2), pages 273-295, April.
  6. Ladd, Helen F., 1994. "Fiscal impacts of local population growth: A conceptual and empirical analysis," Regional Science and Urban Economics, Elsevier, vol. 24(6), pages 661-686, December.
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