DRAFT ! Will Consolidation Improve Sub - National Governments ?

Introduction....................................................................................................................................................................... 2 Recent Experiences with Consolidation ...................................................................................................................... 4 Consolidation and the Costs of Delivering Government Services .......................................................................... 7 Conceptual Measurement of Size Economies ........................................................................................................ 9 Empirical Measurement of Size Economies ......................................................................................................... 11 Size Economies in Education.................................................................................................................................. 13 Size Economies in Water Services ......................................................................................................................... 17 Government-Wide Economies ................................................................................................................................ 19 Transition Costs......................................................................................................................................................... 26 Do Consolidated Governments Meet Service Demands?....................................................................................... 27 Relationship between the Number of Governments and Consumer Satisfaction........................................... 29 Competition and Government Size, Service Level, and Productivity.............................................................. 33 Tiebout and Public Choice....................................................................................................................................... 37 Political Competition and Government Performance ......................................................................................... 42 Regional Planning.......................................................................................................................................................... 43 Economic Growth...................................................................................................................................................... 44 Internalizing Spillovers ............................................................................................................................................ 46 Greater Political Influence at the National and State Levels ............................................................................. 47 Equity Goals from Amalgamation.............................................................................................................................. 48 Conclusions..................................................................................................................................................................... 49 References....................................................................................................................................................................... 52