On the Optimal Structure of Local Governments

Oded Hochman, David Pines and Jacques Thisse

No 899, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We show that space matters in designing the optimal provision of local public goods (LPGs). Geography imposes particular institutional structure of local governments due to the overlapping of market areas associated with different LPGs. The optimum can be decentralized through local governments that have jurisdiction over market areas of all LPG-types. This implies that the appropriate suppliers of LPGs are metropolitan approach invalidates the prevailing theory of fiscal federalism, according to which a layer of government should be established for each type of LPG.

Keywords: Land Rent; Local Public Goods; Metropolitan Governments; Transportation Costs (search for similar items in EconPapers)
JEL-codes: H11 H72 R51 R53 (search for similar items in EconPapers)
Date: 1994-03
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: On the Optimal Structure of Local Governments (1995)
Working Paper: On the optimal structure of local governments (1995)
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