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Demand for Locally Provided Public Services within the Median Voter's Framework: the Case of the Brazilian Municipalities

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  • Constantino Cronemberger Mendes
  • Maria da Conceição Sampaio de Sousa

Abstract

In this paper we estimated the demand for local public spending for the Brazilian municipalities within a median voter’s framework. The median voter theorem provides a method of aggregating individual voter's demands to obtain community demand. The rationale for applying that framework came from the fact that in federal systems voter’s preferences are more likely to be reflected at the local level as the consumers of public services have a better knowledge of the benefits and costs of the local public expenditures. Results obtained are consistent with the theoretical background thus suggesting that this hypothesis might be useful to describe the demand for local public goods in Brazil. In particular, the use of quantile regression permitted to investigate the impacts of the conditioning variables on local public expenses across different expenditures classes thus allowing for heterogeneity across municipalities. Our results also suggest that the impact of the city size on the quality of club goods shows crowding effects as g is between zero and one. However, in the estimated models, marginal congestion slightly decreases with expenditure. This is a rather surprising result as one is tempted to conclude that the congestion effect should be higher on big cities. Yet, a more careful look shows the drawbacks of such interpretation. The indivisibilities preclude the provision of certain services in small towns, concentrating their provision on larger cities. Hence, the higher expenditures of those big cities reflect not only a crowding cost but also the fact that these towns offer a wide range of services when compared to the small ones. So, in Brazil, contrary to the traditional results, the reduced congestion effect along the spending classes reflect the predominance of the scale elements measured by the population elasticities over the price effects. Neste estudo, estimou-se a demanda para a despesa pública local nas municipalidades brasileiras dentro de uma abordagem do eleitor mediano. O teorema do eleitor mediano provê um método de agregação de demandas individuais para obter a demanda comunitária. A razão para o uso dessa abordagem advém do fato de que em sistemas federativos as preferências dos eleitores são mais bem representadas em nível local por meio dos consumidores desses serviços, que têm melhor conhecimento dos custos e benefícios das despesas públicas locais. Os resultados sugerem que o impacto do tamanho da cidade na qualidade de bens mostra efeitos de aglomeração entre zero e um. Contudo, o congestionamento marginal diminui com a despesa, resultado este surpreendente, uma vez que sugere que o efeito congestionamento deve ser mais elevado em cidades grandes. As indivisibilidades que impossibilitam a provisão de determinados serviços em cidades pequenas influenciam a concentração de suas provisões em cidades maiores. As despesas mais elevadas daquelas cidades grandes refletem não somente um custo de aglomeração, mas também o fato de que essas cidades oferecem uma escala maior de serviços. Assim, no Brasil, contrariamente aos resultados tradicionais, o efeito reduzido do congestionamento ao longo das classes da despesa reflete a predominância dos elementos da escala medidos pelas elasticidades da população sobre os efeitos do preço.

Suggested Citation

  • Constantino Cronemberger Mendes & Maria da Conceição Sampaio de Sousa, 2015. "Demand for Locally Provided Public Services within the Median Voter's Framework: the Case of the Brazilian Municipalities," Discussion Papers 0134, Instituto de Pesquisa Econômica Aplicada - IPEA.
  • Handle: RePEc:ipe:ipetds:0134
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    References listed on IDEAS

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