Local Government Cooperation at Work: A Control Function Approach

33 Pages Posted: 28 Jan 2015

See all articles by Zineb abidi

Zineb abidi

CREM CNRS, University of Caen Basse Normandie

Edoardo Di Porto

University of Naples Federico II - CSEF - Center for Studies in Economics and Finance

Angela Parenti

University of Pisa

Sonia Paty

University of Angers - Institute of Economic Theory and Analysis (GATE)

Date Written: 2014

Abstract

We analyze voluntary coalition formation using a unique panel data for 1,056 municipalities in the French region of Brittany between 1995 and 2002. We use a control function approach to develop a binary discrete choice model with spatial interactions. We find that a municipality’s decision to cooperate over the provision local public goods depends on the decisions of its neighbours. Comparison with spatial econometrics models (SAR and Durbin) shows that the decision to cooperate is over estimated by these more traditional models. The results are in line with the recent applied spatial economics literature but are derived for a discrete choice model setting.

Keywords: Inter-municipal cooperation; panel data; control function

JEL Classification: C03, H02, H04, H07

Suggested Citation

abidi, Zineb and Di Porto, Edoardo and Parenti, Angela and Paty, Sonia, Local Government Cooperation at Work: A Control Function Approach (2014). Available at SSRN: https://ssrn.com/abstract=2556217 or http://dx.doi.org/10.2139/ssrn.2556217

Zineb Abidi (Contact Author)

CREM CNRS, University of Caen Basse Normandie ( email )

19 rue Bloch
Caen, 14032
France

Edoardo Di Porto

University of Naples Federico II - CSEF - Center for Studies in Economics and Finance ( email )

Via Cintia
Complesso Monte S. Angelo
Naples, Naples 80126
Italy

Angela Parenti

University of Pisa ( email )

Lungarno Pacinotti, 43
Pisa PI, 56126
Italy

Sonia Paty

University of Angers - Institute of Economic Theory and Analysis (GATE) ( email )

93, chemin des Mouilles
Monnaie et Finance at Lyon
69130 Ecully cedex
France

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