TITLE:
Asymmetric Local Government Consolidations with Heterogeneous Local Public Goods
AUTHORS:
Akiyoshi Furukawa
KEYWORDS:
Consolidation, Local Public Goods, Asymmetric District, Commuting Cost
JOURNAL NAME:
Theoretical Economics Letters,
Vol.4 No.4,
April
24,
2014
ABSTRACT: This paper analyzes the consolidation of asymmetric local governments.
When a small district merges into a larger one, the consolidating government
can provide a higher level of public services. Normally, residents in large
districts favor consolidation while residents in small district oppose it. This
paper shows a condition in which desirable consolidation is realized. The
result is that only when fixed costs exist within which the public good is
produced after consolidation and the commuting cost is very low, is
consolidation realized. In an alternate case, consolidation does not occur
although it is desirable.