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Inter-municipal Cooperation and the provision of local public goods: Economies of scale, fiscal competition or « zoo » effect?

Author

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  • Sonia Paty

    (GATE Lyon Saint-Étienne - Groupe d'Analyse et de Théorie Economique Lyon - Saint-Etienne - UL2 - Université Lumière - Lyon 2 - UJM - Université Jean Monnet - Saint-Étienne - EM - EMLyon Business School - CNRS - Centre National de la Recherche Scientifique)

  • Morgan Ubeda

    (CESAER - Centre d'économie et de sociologie rurales appliquées à l'agriculture et aux espaces ruraux - UBFC - Université Bourgogne Franche-Comté [COMUE] - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Institut Agro Dijon - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement)

Abstract

Inter-municipal communities are supposed to provide local public services more efficiently by exploiting economies of scale and reducing spillover effects among cooperating municipalities. In a diff-in-diff setting that exploits the staggered adoption of cooperation in France, we explore the impact of inter-municipal cooperation on both local public spending and revenues. We first find a sizable increase in local public spending which was not driven by wage bill expansion. Second, by using the decomposition of spending by function, we show that this increase was driven by urbanism policies. Third, we show that a quarter of this effect can be explained by the transfer of two policies: public transit and garbage collection. Overall, we conclude that scale economies, if existent, were clearly dominated by a ”zoo” effect, i.e. the provision of new public services in small and former isolated municipalities.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Sonia Paty & Morgan Ubeda, 2022. "Inter-municipal Cooperation and the provision of local public goods: Economies of scale, fiscal competition or « zoo » effect?," Post-Print hal-04756702, HAL.
    • Handle: RePEc:hal:journl:hal-04756702
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