Citizen preferences and the architecture of government

We consider the division of a territory into administrative districts responsible for providing a set of goods and services to residents who are sensitive to service congestion. We deduce the optimal architecture of public governance (i.e. the division of government into several levels, the distribution of services among them, their number of jurisdictions and the size of their administrations), which depends on how citizens weigh the performance capacity of administrations and the services they produce. We compare it to a decentralized organization where each jurisdiction is free to choose the size and scope of its administration. The resulting architecture generally involves more countries with fewer levels of administration than the optimal one. We use our results to estimate citizen preferences using U.S. data. We find that the country is divided into two zones ("Northeast & West" and "Midwest & South") whose estimated values are statistically different.