Piling On: Overlapping Jurisdictions & the Fiscal Common-Pool

Christopher Berry

No 705, Working Papers from Harris School of Public Policy Studies, University of Chicago

Abstract: This paper discusses the common-pool problems that arise when multiple territorially overlapping governments share the authority to provide services and levy taxes in a common geographic area. Contrary to the traditional Tiebout model in which increasing the number of competing governments improves efficiency, I argue that increasing the number of overlapping governments results in "overfishing" from the shared tax base. I test the model empirically using data from U.S. counties and find a strong positive relationship between the number of overlapping jurisdictions and the size of the local public sector. Substantively, the "overlap effect" is on the order of 5 to 25 percent of local revenue.

Keywords: government; tax base; local government (search for similar items in EconPapers)
Date: 2007-01
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