Factors and spatial distribution of rebuilding of old condominium

Baba, Hisao

doi:10.11361/journalcpij.55.1143

Cited by 1 publication

(1 citation statement)

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“…When considering jurisdictional consolidation, it would be also desirable to keep in mind that the desirable economies of scale may also be obtained via alternate processes such as privatization or interjurisdictional cooperation. In any case, transaction costs due to the need for monitoring the quality of service provision or negotiation with partners and providers may be also relevant for all those alternatives (Baba & Asami, 2020).…”

Section: Meta-regression Analysismentioning

confidence: 99%

Evidence on economies of scale in local public service provision: A meta‐analysis

Gómez-Reino

Peñas

Martínez-Vázquez

2023

Journal of Regional Science

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The standard theory of optimal jurisdictional size hinges on the existence of economies of scale in the provision of local public goods and services. However, despite its relevance for forced local amalgamation programs and related policies, the empirical evidence on the existence of such economies of scale remains elusive. The main goal of this paper is to produce an updated and comprehensive quantitative review of the existence of economies of scale in the provision of local public goods using a meta‐analysis approach to systematize the wide range of empirical approaches and modeling frameworks found in the previous literature. Our analysis confirms the presence of moderately increasing to constant returns to scale in the provision of local services with no reduction in the average costs of production in the delivery of most local public services beyond a certain, modest jurisdictional size, which many studies have estimated at 10,000 residents. Also, the potential for economies of scale differs at least across three traditional services: education, water and sanitation, and garbage collection, being highest for education and lowest for garbage collection. Our analysis also offers guidelines for future empirical research in this area. Physical output and production cost data should be used, together with translog specifications for the modeling of cost functions. Last, we find evidence that the determinants of output cost elasticity include bidirectional publication bias and population density but do not include the presence or absence of modern “lean” production technologies or the (perceived) capital intensity of the sector, contrary to conventional wisdom. These findings have significant policy implications for countries considering jurisdictional consolidation programs.

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Section: Meta-regression Analysismentioning

confidence: 99%