Cooperation among Local Councils for the Provision of Public Goods

David Bartolini () and Fabio Fiorillo ()

Rivista italiana degli economisti, 2011, issue 1, 85-108

Abstract: In order to provide local public goods, municipalities can cooperate and exploit economiesof scale and scope. We present an analytical model of the costs and benefits of two such forms of cooperation:Consortia and Unions. We find that the efficiency of these two forms of cooperation depends onthe number of participants, the transaction costs, and most importantly the type of local public good. Inparticular, the elasticity of substitution among the services pertaining to a particular public good plays adecisive role. For services with a high elasticity of substitution the Union performs better than the Consortium,and vice versa. This provides a guidance for the decision on which institution provides whatpublic good.

Keywords: regional economics; partnerships; D23; H77; R50. (search for similar items in EconPapers)
Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:mul:jqat1f:doi:10.1427/33904:y:2011:i:1:p:85-108

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