Declared vs. revealed yardstick competition:Local government efficiency in Norway
This paper investigates whether the production efficiency of Norwegian local governments exhibits a spatial pattern that is compatible with the hypothesis of yardstick competition. In order to check whether yardstick competition is really responsible far the observed spatial pattern, and to rule out alternative theoretical explanations, the paper exploits unique information from a survey on Norwegian local governments, where local public officials are explicitly asked whether they compare their own performances in the provision of public services to those of other governments (benchmarking). Merging the latter information - "declared" yardstick competition - with the observed interdependence in local efficiency measures - "revealed" yardstick competition - the paper provides evidence that comparative performance evaluation generates spatial auto-correlation in local efficiency indicators.
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