Public School Consolidation: A Partial Observability Spatial Bivariate Probit Approach

Journal of the Royal Statistical Society - Series A, Volume: 180, Issue: 2, Page Number(s): 633-656

University of Cincinnati Lindner College of Business Research Paper

Posted: 6 Nov 2017

See all articles by David M. Brasington

David M. Brasington

University of Cincinnati - Department of Economics

Olivier Parent

University of Cincinnati - Department of Economics

Date Written: July 1, 2016

Abstract

A pair of municipalities may consolidate services if they are contiguous. Traditional estimation methods assume that each voting process is independent. Instead we propose a new estimation procedure that allows the probability of consolidation to be influenced by neighbouring decisions. We extend a model of local interaction by allowing consolidation effort of neighbours to be either strategic substitutes or strategic complements. We disentangle direct effects arising from a change in one's own characteristics from indirect or spillover effects associated with a change in the other municipalities’ characteristics. Results reveal that the endogenous peer effect coming from neighbours is a primary determinant of willingness to consolidate.

Suggested Citation

Brasington, David M. and Parent, Olivier, Public School Consolidation: A Partial Observability Spatial Bivariate Probit Approach (July 1, 2016). Journal of the Royal Statistical Society - Series A, Volume: 180, Issue: 2, Page Number(s): 633-656 ; University of Cincinnati Lindner College of Business Research Paper . Available at SSRN: https://ssrn.com/abstract=3064231

David M. Brasington (Contact Author)

University of Cincinnati - Department of Economics ( email )

Carl H. Lindner Hall 2925 Campus Green Drive
PO Box 0371
Cincinnati, OH 45221-0211
United States

Olivier Parent

University of Cincinnati - Department of Economics ( email )

Carl H. Lindner Hall 2925 Campus Green Drive
PO Box 0371
Cincinnati, OH 45221-0211
United States

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