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Declared vs. revealed yardstick competition:Local government efficiency in Norway

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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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Paper provided by University of Turin in its series Department of Economics and Statistics Cognetti de Martiis. Working Papers with number 200605.

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Length: 25 pages
Date of creation: Jun 2006
Handle: RePEc:uto:dipeco:200605
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  1. Bordignon, Massimo & Cerniglia, Floriana & Revelli, Federico, 2004. "Yardstick competition in intergovernmental relationships: theory and empirical predictions," Economics Letters, Elsevier, vol. 83(3), pages 325-333, June.
  2. Besley, Timothy & Case, Anne, 1995. "Incumbent Behavior: Vote-Seeking, Tax-Setting, and Yardstick Competition," American Economic Review, American Economic Association, vol. 85(1), pages 25-45, March.
  3. Revelli, Federico, 2006. "Performance rating and yardstick competition in social service provision," Journal of Public Economics, Elsevier, vol. 90(3), pages 459-475, February.
  4. Carol Propper & Deborah Wilson, 2003. "The Use and Usefulness of Performance Measures in the Public Sector," Oxford Review of Economic Policy, Oxford University Press, vol. 19(2), pages 250-267, Summer.
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  8. Helen F. Ladd, 1992. "Mimicking of Local Tax Burdens Among Neighboring Counties," Public Finance Review, , vol. 20(4), pages 450-467, October.
  9. Aronsson, Thomas & Blomquist, Soren & Sacklen, Hans, 1999. "Identifying Interdependent Behaviour in an Empirical Model of Labour Supply," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 14(6), pages 607-626, Nov.-Dec..
  10. Anselin, Luc & Bera, Anil K. & Florax, Raymond & Yoon, Mann J., 1996. "Simple diagnostic tests for spatial dependence," Regional Science and Urban Economics, Elsevier, vol. 26(1), pages 77-104, February.
  11. Fried, Harold O. & Lovell, C. A. Knox & Schmidt, Shelton S. (ed.), 1993. "The Measurement of Productive Efficiency: Techniques and Applications," OUP Catalogue, Oxford University Press, number 9780195072181.
  12. De Borger, B & Kerstens, K. & Moesen, W. & Vanneste, J., 1994. "Explaining Differences in Productive Efficiency: An Application to Belgian Municipalities," Public Choice, Springer, vol. 80(3-4), pages 339-358, September.
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  17. Heyndels, Bruno & Vuchelen, Jef, 1998. "Tax Mimicking Among Belgian Municipalities," National Tax Journal, National Tax Association, vol. 51(1), pages 89-101, March.
  18. Jorid Kalseth & Jørn Rattsø, 1998. "Political Control of Administrative Spending: The Case of Local Governments in Norway," Economics and Politics, Wiley Blackwell, vol. 10(1), pages 63-83, 03.
  19. Heyndels, Bruno & Vuchelen, Jef, 1998. "Tax Mimicking Among Belgian Municipalities," National Tax Journal, National Tax Association, vol. 51(n. 1), pages 89-101, March.
  20. Charles F. Manski, 1993. "Identification of Endogenous Social Effects: The Reflection Problem," Review of Economic Studies, Oxford University Press, vol. 60(3), pages 531-542.
  21. repec:rus:hseeco:122160 is not listed on IDEAS
  22. Strom, Bjarne, 1995. "Envy, Fairness and Political Influence in Local Government Wage Determination: Evidence from Norway," Economica, London School of Economics and Political Science, vol. 62(247), pages 389-409, August.
  23. Nouriel Roubini & Jeffrey Sachs, 1989. "Government Spending and Budget Deficits in the Industrial Economies," NBER Working Papers 2919, National Bureau of Economic Research, Inc.
  24. Case, Anne C. & Rosen, Harvey S. & Hines, James Jr., 1993. "Budget spillovers and fiscal policy interdependence : Evidence from the states," Journal of Public Economics, Elsevier, vol. 52(3), pages 285-307, October.
  25. Bivand, Roger & Szymanski, Stefan, 1997. "Spatial dependence through local yardstick competition:: theory and testing," Economics Letters, Elsevier, vol. 55(2), pages 257-265, August.
  26. Babcock, Linda & Engberg, John & Greenbaum, Robert, 2005. "Wage spillovers in public sector contract negotiations: the importance of social comparisons," Regional Science and Urban Economics, Elsevier, vol. 35(4), pages 395-416, July.
  27. Ashworth, John & Heyndels, Bruno, 1997. "Politicians' preferences on local tax rates: An empirical analysis," European Journal of Political Economy, Elsevier, vol. 13(3), pages 479-502, September.
  28. Moene, Karl O., 1986. "Types of bureaucratic interaction," Journal of Public Economics, Elsevier, vol. 29(3), pages 333-345, April.
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