Efficient municipal consolidation and local public spending: a theoretical approach

ABSTRACT

This paper analyses whether municipal consolidation decreases local public spending, using the local public goods model. First, the conditions under which municipal consolidation achieves efficient allocation are shown. Then, this paper shows that one effect of municipal consolidation is to expand local public services and not to reduce local public expenditure.

KEYWORDS:

• Municipal consolidation
• local public expenditure
• regional population
• boundary reform

JEL CLASSIFICATION:

• R51
• H72
• R23
• H73

Acknowledgments

I thank anonymous referee, Mototsugu Fukushige, Naosumi Atoda, Keiko Shimono, Shinichi Kitasaka, Masaya Sakuragawa and participants in KMSG seminar for their helpful comments.

Disclosure statement

No potential conflict of interest was reported by the author.