This paper analyzes the consolidation of asymmetric local governments.
When a small district merges into a larger one, the consolidating government
can provide a higher level of public services. Normally, residents in large
districts favor consolidation while residents in small district oppose it. This
paper shows a condition in which desirable consolidation is realized. The
result is that only when fixed costs exist within which the public good is
produced after consolidation and the commuting cost is very low, is
consolidation realized. In an alternate case, consolidation does not occur
although it is desirable.
Cite this paper
Furukawa, A. (2014) Asymmetric Local Government Consolidations with Heterogeneous Local Public Goods. Theoretical Economics Letters
, 305-310. doi: 10.4236/tel.2014.44041
 Blume, L. and Blume, T. (2007) The Economic Effects of Local Authority Mergers: Empirical Evidence for German City Regions. Annals of Regional Science, 41, 689-713. http://dx.doi.org/10.1007/s00168-007-0118-6
 Braid, R.M. (2010) Provision of a Pure Local Public Good in a Spatial Model with Many Jurisdictions. Journal of Public Economics, 94, 890-897. http://dx.doi.org/10.1016/j.jpubeco.2010.07.008
 Hinnerich, B.T. (2009) Do Merging Local Governments Free Ride on Their Counterparts When Facing Boundary Reform? Journal of Public Economics, 93, 721-728. http://dx.doi.org/10.1016/j.jpubeco. 2009.01.003
 Conley, J. and Dix, M. (1999) Optimal and Equilibrium Membership in Clubs in the Presence of Spillovers. Journal of Urban Economics, 46, 215-229. http://dx.doi.org/10.1006/juec.1998.2119
 Sasaki, K. (2000) Local Public Goods and Their Capital-Gain Effects. Regional Science and Urban Economics, 30, 45-57. http://dx.doi.org/10.1016/S0166-0462(99)00031-9
 Anas, A. and Xiong, K. (2003) Intercity Trade and the Industrial Diversification of Cities. Journal of Urban Economics, 54, 258-276. http://dx.doi.org/10.1016/S0094-1190(03)00073-1
 Anas, A. and Xiong, K. (2005) The Formation and Growth of Specialized Cities: Efficiency without Developers or Malthusian Traps. Regional Science and Urban Economics, 35, 445-470. http://dx.doi.org/10.1016/j.regsciurbeco.2003.11.001
 Alesina, A. and Spolaore, E. (1997) On the Number and Size of Nations. Quarterly Journal of Economics, 112, 1027-1056. http://dx.doi.org/10.1162/003355300555411
 Orutuno-Ortin, I. and Sempere, J. (2006) A Theoretical Model of Nations, Regions and Fiscal Integration. Regional Science and Urban Economics, 36, 132-157.
 Bolton, P. and Roland, G. (1996) Distribution Conflicts, Factor Mobility and Political Integration. American Economic Review, 86, 99-104.
 Ellingsen, T. (1998) Externalities vs Internalities: A Model of Political Integration. Journal of Public Economics, 68, 251-268. http://dx.doi.org/10.1016/S0047-2727(97)00090-X
 Dur, R. and Staal, K. (2008) Local Public Good Provision, Municipal Consolidation, and National Transfers. Regional Science and Urban Economics, 38, 160-173. http://dx.doi.org/10.1016/j.regsciurbeco.2008.01.005
 Sørensen, R.J. (2006) Local Government Consolidations: The Impact of Political Transaction Costs. Public Choice, 127, 75-95. http://dx.doi.org/10.1007/s11127-006-7106-8