IDEAS home Printed from https://ideas.repec.org/p/fsu/wpaper/wp2004-11-01.html
   My bibliography  Save this paper

The Interaction Between Public and Private Governments: An Empirical Analysis

Author

Listed:
  • Ron Cheung

    () (Department of Economics, Florida State University)

Abstract

Private governments, found in planned developments and condominiums, are increasingly common methods of delivering local services to residents. This paper provides the first empirical study of their impact on local public finance. A novel dataset of homeowners' associations allows construction of a panel of private governments in California. Panel methods test whether public expenditures respond to private government prevalence. Estimates indicate that local governments lower spending moderately in response to private government activity, consistent with strategic substitution. The paper then examines various mechanisms to explain this downloading and shows that the substitutability between public and private providers is key to which services ere downloaded. Evidence also suggests that the economies of scale in service production in small cities temper the offloading of public services to private governments.

Suggested Citation

  • Ron Cheung, 2004. "The Interaction Between Public and Private Governments: An Empirical Analysis," Working Papers wp2004_11_01, Department of Economics, Florida State University, revised Feb 2007.
  • Handle: RePEc:fsu:wpaper:wp2004-11-01
    as

    Download full text from publisher

    File URL: ftp://econpapers.fsu.edu/RePEc/fsu/wpaper/wp2004_11_01.pdf
    File Function: First version, 2004
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Austin, D. Andrew, 1999. "Politics vs Economics: Evidence from Municipal Annexation," Journal of Urban Economics, Elsevier, vol. 45(3), pages 501-532, May.
    2. Borcherding, Thomas E & Deacon, Robert T, 1972. "The Demand for the Services of Non-Federal Governments," American Economic Review, American Economic Association, vol. 62(5), pages 891-901, December.
    3. Ron Cheung, 2005. "The Effect of Property Tax Limitations on Residential Private Governments," Working Papers wp2005_05_01, Department of Economics, Florida State University.
    4. Epple, Dennis & Romer, Thomas, 1989. "On the flexibility of municipal boundaries," Journal of Urban Economics, Elsevier, vol. 26(3), pages 307-319, November.
    5. Brooks, Leah, 2007. "Unveiling Hidden Districts: Assessing the Adoption Patterns of Business Improvement Districts in California," National Tax Journal, National Tax Association;National Tax Journal, vol. 60(1), pages 5-24, March.
    6. Helsley, Robert W. & Strange, William C., 2000. "Potential competition and public sector performance," Regional Science and Urban Economics, Elsevier, vol. 30(4), pages 405-428, July.
    7. Helsley, Robert W. & Strange, William C., 1998. "Private government," Journal of Public Economics, Elsevier, vol. 69(2), pages 281-304, June.
    8. Duncombe, William D, 1992. "Costs and Factor Substitution in the Provision of Local Fire Services," The Review of Economics and Statistics, MIT Press, vol. 74(1), pages 180-184, February.
    9. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004. "How Much Should We Trust Differences-In-Differences Estimates?," The Quarterly Journal of Economics, Oxford University Press, vol. 119(1), pages 249-275.
    10. Aronsson, Thomas & Lundberg, Johan & Wikstrom, Magnus, 2000. "The impact of regional public expenditures on the local decision to spend," Regional Science and Urban Economics, Elsevier, vol. 30(2), pages 185-202, March.
    11. Brueckner, Jan K., 1998. "Testing for Strategic Interaction Among Local Governments: The Case of Growth Controls," Journal of Urban Economics, Elsevier, vol. 44(3), pages 438-467, November.
    12. Tracy M. Gordon, 2003. "Crowd out or crowd in?: The effects of common interest developments on political participation in California," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 37(2), pages 203-233, May.
    13. Greene, Kenneth V & Nelson, Phillip J, 1994. "Legislative Majorities and Alternative Theories of the Size of Government," Public Finance = Finances publiques, , vol. 49(1), pages 42-56.
    14. Matsusaka, John G, 1995. "Fiscal Effects of the Voter Initiative: Evidence from the Last 30 Years," Journal of Political Economy, University of Chicago Press, vol. 103(3), pages 587-623, June.
    15. Helsley, Robert W. & Strange, William C., 1999. "Gated Communities and the Economic Geography of Crime," Journal of Urban Economics, Elsevier, vol. 46(1), pages 80-105, July.
    16. Levin, Andrew & Lin, Chien-Fu & James Chu, Chia-Shang, 2002. "Unit root tests in panel data: asymptotic and finite-sample properties," Journal of Econometrics, Elsevier, vol. 108(1), pages 1-24, May.
    17. J. Miguel Villas-Boas & Russell S. Winer, 1999. "Endogeneity in Brand Choice Models," Management Science, INFORMS, vol. 45(10), pages 1324-1338, October.
    18. Jan K. Brueckner, 2003. "Strategic Interaction Among Governments: An Overview of Empirical Studies," International Regional Science Review, , vol. 26(2), pages 175-188, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ron Cheung, 2005. "The Effect of Property Tax Limitations on Residential Private Governments," Working Papers wp2005_05_01, Department of Economics, Florida State University.
    2. Ron Cheung & Rachel Meltzer, 2013. "Homeowners Associations And The Demand For Local Land Use Regulation," Journal of Regional Science, Wiley Blackwell, vol. 53(3), pages 511-534, August.
    3. Cheung, Ron & Cunningham, Chris & Meltzer, Rachel, 2014. "Do homeowners associations mitigate or aggravate negative spillovers from neighboring homeowner distress?," Journal of Housing Economics, Elsevier, vol. 24(C), pages 75-88.
    4. Meltzer, Rachel & Cheung, Ron, 2014. "How are homeowners associations capitalized into property values?," Regional Science and Urban Economics, Elsevier, vol. 46(C), pages 93-102.
    5. William H. Rogers, 2010. "Measuring the Price Impact of Municipal Incorporation on Homeowner Associations," Land Economics, University of Wisconsin Press, vol. 86(1), pages 91-116.
    6. Stefano Moroni, 2014. "Towards a general theory of contractual communities: neither necessarily gated, nor a form of privatization," Chapters,in: Cities and Private Planning, chapter 3, pages 38-65 Edward Elgar Publishing.
    7. Brooks, Leah & Strange, William C., 2011. "The micro-empirics of collective action: The case of business improvement districts," Journal of Public Economics, Elsevier, vol. 95(11), pages 1358-1372.
    8. Meltzer, Rachel, 2011. "“Clean and Safe” for All? The Interaction Betweeen Business Improvement Districts and Local Government in the Provision of Public Goods," National Tax Journal, National Tax Association;National Tax Journal, vol. 64(3), pages 863-889, September.

    More about this item

    Keywords

    private government; planned development; gated community; strategic interaction; strategic substitution; downloading; condominium;

    JEL classification:

    • R0 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General
    • H0 - Public Economics - - General
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fsu:wpaper:wp2004-11-01. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dmitry Ryvkin). General contact details of provider: http://edirc.repec.org/data/defsuus.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.