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Too Many Municipalities?

  • Dahlby, Bev

    ()

    (University of Alberta, Department of Economics)

Does democracy lead to the creation of too many municipalities? We analyze this issue within the context of the Alesina and Spolare (1996) model where the quality of municipal services deteriorates with the distance from the center of a municipality. Individuals can vote in a referendum to split an existing municipality. We show that social welfare will decline when municipalities are split if the level of the public service, as chosen by the median voter, is lower in the new smaller municipalities. In general, the model indicates that there may be a democratic bias in favour of creating too many municipalities.

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File URL: http://www.ualberta.ca/~econwps/2009/wp2009-18.pdf
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Paper provided by University of Alberta, Department of Economics in its series Working Papers with number 2009-18.

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Length: 20 pages
Date of creation: Feb 2009
Date of revision:
Handle: RePEc:ris:albaec:2009_018
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  1. Alberto Alesina & Enrico Spolaore, 1995. "On the Number and Size of Nations," NBER Working Papers 5050, National Bureau of Economic Research, Inc.
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