Local Government Cooperation for Joint Provision: The Experiences of Brazil and Spain With Inter-Municipal Consortia

30 Pages Posted: 4 Apr 2012 Last revised: 1 Jan 2015

See all articles by Luiz R. de Mello

Luiz R. de Mello

OECD

Santiago Lago-Peñas

University of Vigo, GEN (Governance and Economics Research Network)

Date Written: April 3, 2012

Abstract

Local governments often set up inter-municipal consortia to provide public services jointly, rather than individually. The main benefits of joint provision include the potential for improved cost-effectiveness arising from gains from economies of scale and the internalization of costs and/or benefits of provision, which could otherwise spill over inter-municipal borders and discourage provision. To shed further light on this issue, this paper tests for the presence of scale and spillover effects in local government provision and estimates the determinants of the probability of local government participation in inter-municipal consortia in Brazil and Spain. Empirical evidence suggests that in some cases smaller jurisdictions operate at suboptimal scale and are indeed more likely than their larger counterparts to participate in inter-municipal consortia. In the case of Brazil, governance arrangements between the municipalities and the state governments and/or private-sector providers, but not the federal government, are also associated with a higher probability of participation in inter-municipal consortia, suggesting the presence of 'participation spillovers' among governance arrangements.

Keywords: inter-municipal cooperation, local public finance, Brazil, Spain, federalism, probit

JEL Classification: H72, H77, H75

Suggested Citation

de Mello, Luiz R. and Lago-Peñas, Santiago, Local Government Cooperation for Joint Provision: The Experiences of Brazil and Spain With Inter-Municipal Consortia (April 3, 2012). Available at SSRN: https://ssrn.com/abstract=2033684 or http://dx.doi.org/10.2139/ssrn.2033684

Luiz R. De Mello (Contact Author)

OECD ( email )

2 rue Andre Pascal
Paris Cedex 16, 75775
France
+33-1-45.24.87.52 (Phone)

Santiago Lago-Peñas

University of Vigo, GEN (Governance and Economics Research Network) ( email )

Ourense, Ourense 32004
Spain

HOME PAGE: http://webs.uvigo.es/infogen

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