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Too Many Municipalities?

Bev Dahlby (bdahlby99@gmail.com)

No 2009-18, Working Papers from University of Alberta, Department of Economics

Abstract: Does democracy lead to the creation of too many municipalities? We analyze this issue within the context of the Alesina and Spolare (1996) model where the quality of municipal services deteriorates with the distance from the center of a municipality. Individuals can vote in a referendum to split an existing municipality. We show that social welfare will decline when municipalities are split if the level of the public service, as chosen by the median voter, is lower in the new smaller municipalities. In general, the model indicates that there may be a democratic bias in favour of creating too many municipalities.

Keywords: median voter model; fiscal federalism; succession; municipal boundaries (search for similar items in EconPapers)
JEL-codes: H71 H72 H77 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2009-02
New Economics Papers: this item is included in nep-pbe, nep-pol and nep-ure
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Journal Article: Too Many Municipalities? (2011) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:ris:albaec:2009_018

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