Finding Your Right (or Left) Partner to Merge

38 Pages Posted: 16 Apr 2015

See all articles by Benjamin Bruns

Benjamin Bruns

Humboldt University of Berlin - School of Business and Economics

Ronny Freier

German Institute for Economic Research (DIW Berlin)

Abel Schumann

Stockholm School of Economics

Date Written: March 2015

Abstract

We study political determinants of municipality amalgamations during a boundary reform in the German state of Brandenburg, which reduced the number of municipalities from 1,489 to 421. The analysis is conducted using data on the political decision makers as well as fiscal and socio-economic variables for the municipalities. We ask whether party representation in the town council influences the merger decision. To identify the effect, we follow a dual approach and make use of different stages in the reform process. First, municipalities were initially free to choose partners. In a later phase of the reform the state legislature forced municipalities to amalgamate. We can, thus, compare voluntary to forced units. Second, we simulate potential mergers from the map of municipalities and compare voluntary mergers to those simulated units. Both approaches show that political representation matters significantly during the voluntary stage of the merger reform.

Keywords: municipality mergers, political decision makers probit analysis, geospatial analysis

JEL Classification: H10, H11, H77

Suggested Citation

Bruns, Benjamin and Freier, Ronny and Schumann, Abel, Finding Your Right (or Left) Partner to Merge (March 2015). DIW Berlin Discussion Paper No. 1467. Available at SSRN: https://ssrn.com/abstract=2594618 or http://dx.doi.org/10.2139/ssrn.2594618

Benjamin Bruns

Humboldt University of Berlin - School of Business and Economics ( email )

Spandauer Str. 1
Berlin, D-10099
Germany

Ronny Freier (Contact Author)

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstra├če 58
Berlin, 10117
Germany

Abel Schumann

Stockholm School of Economics ( email )

PO Box 6501
Stockholm, 11383
Sweden

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