The Risks of Intuition: Size, Costs and Economies of Scale in Local Government

Mark Callanan, Ronan Murphy and Aodh Quinlivan
Additional contact information
Mark Callanan: Institute of Public Administration, Dublin, Ireland
Ronan Murphy: Local Government Researcher
Aodh Quinlivan: University College Cork; Ireland

The Economic and Social Review, 2014, vol. 45, issue 3, 371-403

Abstract: Extensive international research surrounds the optimal size of local government and associated issues of amalgamations and economies of scale in local government. Given recent structural reforms of Irish local government, this paper examines both the theoretical debates on these issues and the international experience with local authority mergers in several countries, highlighting the rationale for and some of the reported effects of mergers. It also assesses the relationship between size and expenditure/service levels in Irish local government, drawing on available data. Contrary perhaps to popular belief, county and city councils, the primary units of local government in Ireland, are already very large by international standards. Overall, the research suggests a weak link between size and costs, and that local authority mergers may have limited intrinsic efficiency value and can involve considerable transitional costs. Most local authority services appear to possess limited economies of scale, the main exceptions being specialised services, the production costs of capital-intensive services, and some administrative overheads and "back office" functions.

Keywords: local government; economies of scale (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eso:journl:v:45:y:2014:i:3:p:371-403

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