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Reconsidering the Demand for Municipal Public Goods Specification : Evidence from French Municipalities

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  • Marie-Estelle Binet

    (University of Rennes 1 - CREM, (UMR 6211 CNRS))

Abstract

Following Bergtrom and Goodman (1973), this paper can be integrated in the set of studies that have estimated the demand for municipal public services. The main innovation in this paper is methodological as we use a Stone Geary utility function to describe the median voter preferences. Unlike previous studies, we are able to derive the local public expenditure function in a (simplified) linear expenditure system, directly from the theoretical framework. The linear expenditure system provides an estimate of the portion of the incompressible public expenditure in each municipality. Using cross sectional municipal data from France, it is found to be 30% of the total per capita expenditure. Compared to the specification generally used in the literature, linear expenditure system shows a greater sensitivity to price and income variations and reveal a greater number of significant variables.

Suggested Citation

  • Marie-Estelle Binet, 2011. "Reconsidering the Demand for Municipal Public Goods Specification : Evidence from French Municipalities," Economics Working Paper Archive (University of Rennes 1 & University of Caen) 201120, Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS.
  • Handle: RePEc:tut:cremwp:201120
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    File URL: https://crem-doc.univ-rennes1.fr/wp/2011/201120.pdf
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    References listed on IDEAS

    as
    1. Borcherding, Thomas E & Deacon, Robert T, 1972. "The Demand for the Services of Non-Federal Governments," American Economic Review, American Economic Association, vol. 62(5), pages 891-901, December.
    2. Maarten A. Allers & J. Paul Elhorst, 2011. "A Simultaneous Equations Model Of Fiscal Policy Interactions," Journal of Regional Science, Wiley Blackwell, vol. 51(2), pages 271-291, May.
    3. Aaberge, Rolf & Langorgen, Audun, 2003. "Fiscal and Spending Behavior of Local Governments: Identification of Price Effects When Prices Are Not Observed," Public Choice, Springer, vol. 117(1-2), pages 125-161, October.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Demand for local public services; Median voter; Linear expenditure system; Nonlinear least squares;

    JEL classification:

    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • R51 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Finance in Urban and Rural Economies
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation

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