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Overlapping Jurisdictions and Demand for Local Public Services: Does Spatial Heterogeneity Matter?

Author

Listed:
  • Marie-Estelle Binet

    (GAEL - Laboratoire d'Economie Appliquée de Grenoble - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - UGA - Université Grenoble Alpes - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - UGA - Université Grenoble Alpes, IEPG - Sciences Po Grenoble-UGA - Institut d'études politiques de Grenoble - UGA - Université Grenoble Alpes)

  • Alain Guengant

    (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR - Université de Rennes - CNRS - Centre National de la Recherche Scientifique)

  • Matthieu Leprince

    (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR - Université de Rennes - CNRS - Centre National de la Recherche Scientifique, AMURE - Aménagement des Usages des Ressources et des Espaces marins et littoraux - Centre de droit et d'économie de la mer - IRD - Institut de Recherche pour le Développement - IFREMER - Institut Français de Recherche pour l'Exploitation de la Mer - UBO EPE - Université de Brest - CNRS - Centre National de la Recherche Scientifique)

Abstract

This paper aims to test the existence of vertical interactions in terms of public spending between overlapping local jurisdictions in France using a data set of 110 French municipalities and their corresponding departments in 2001 and 2005. To do so, we consider that demand for municipal services is conditioned by the services provided by departments. We then estimate two specifications which allow spatial heterogeneity to be modeled thanks to models with spatial regimes and which are compared with a simple spatial error specification (without spatial heterogeneity). The two estimated spatial regimes models are able to eliminate spatial autocorrelation in the error term. The estimation results show that an appropriate consideration of spatial heterogeneity can lead to new insights. The spatial error specification without regimes reveals a robust complementary demand relationship between services provided by departmental and municipal governments. However, the results provided by the spatial regime models are different. They give evidence of heterogeneity in the nature of vertical spending interactions with independence, complementarity, or substitution between the services offered by the two overlapping jurisdictions.

Suggested Citation

  • Marie-Estelle Binet & Alain Guengant & Matthieu Leprince, 2020. "Overlapping Jurisdictions and Demand for Local Public Services: Does Spatial Heterogeneity Matter?," Post-Print hal-02615276, HAL.
    • Handle: RePEc:hal:journl:hal-02615276
    DOI: 10.1007/978-3-030-43694-0_14
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    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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