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Agglomeration, Population Size, and the Cost of Providing Public Services: An Empirical Analysis for German States

  • Stegarescu, Dan
  • Schwager, Robert
  • Büttner, Thiess

This paper is concerned with the question as to what extent population size and density affect the cost of providing public services at the subnational level. Empirical estimates of cost functions are obtained from an analysis of the expenditures of German states disaggregated into about 40 functions of government. The empirical results indicate that generally there is no significant relationship between population density and the cost of public goods. At the same time, cost are almost proportionately related to population size indicating that goods and services provided by the German states display only a limited degree of publicness.

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File URL: http://econstor.eu/bitstream/10419/24041/1/dp0418.pdf
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Paper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 04-18.

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Date of creation: 2004
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Handle: RePEc:zbw:zewdip:2028
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  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. Oates, Wallace E., 1988. "On the measurement of congestion in the provision of local public goods," Journal of Urban Economics, Elsevier, vol. 24(1), pages 85-94, July.
  3. Litvack, James M & Oates, Wallace E, 1970. "Group Size and the Output of Public Goods: Theory and Application to State-Local Finance in the United States," Public Finance = Finances publiques, , vol. 25(1), pages 42-62.
  4. Steven G. Craig & Eric J. Heikkila, 1989. "Urban Safety in Vancouver: Allocation and Production of a Congestible Public Good," Canadian Journal of Economics, Canadian Economics Association, vol. 22(4), pages 867-84, November.
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