Public Sector Inefficiency in Large U.S. Cities

34 Pages Posted: 22 Feb 1998

See all articles by Philip J. Grossman

Philip J. Grossman

Monash University - Department of Economics

Panayiotis Mavros

Wayne State University - Department of Economics; Aarhus University - School of Economics and Management

Robert W. Wassmer

California State University, Sacramento - Department of Public Policy & Administration

Date Written: March 1996

Abstract

Much of the economic analysis of local governments assumes that local policymakers operate in a competitive environment where cities produce a level of local public sector output that can be considered "efficient". Efficiency can be quantifies as the highest value of local property tax base possible given the endogenous and exogenous inputs available to a city government. If a city is not producing the highest attainable property value, ceteris paribus, then it could be considered inefficient. In this paper we attempt to measure the relative efficiency of large city governments in the U.S. through the technique of production frontier analysis. In a second stage of our empirical analysis we regress the derived measure of relative inefficiency against variables that have been proposed as causes of public production inefficiency. Our results show that large city governments are operating at different degrees of efficiency and that many of the causal hypotheses advanced in this regard are empirically valid.

JEL Classification: H00, H72, R00, R50

Suggested Citation

Grossman, Philip J. and Mavros, Panayiotis and Wassmer, Robert William, Public Sector Inefficiency in Large U.S. Cities (March 1996). Available at SSRN: https://ssrn.com/abstract=61388 or http://dx.doi.org/10.2139/ssrn.61388

Philip J. Grossman (Contact Author)

Monash University - Department of Economics ( email )

Wellington Road
Clayton, 3800
Australia
61399020052 (Phone)

Panayiotis Mavros

Wayne State University - Department of Economics ( email )

656 W. Kirby
Detroit, MI 48202
United States

Aarhus University - School of Economics and Management ( email )

Building 350
DK-8000 Aarhus C
Denmark

Robert William Wassmer

California State University, Sacramento - Department of Public Policy & Administration ( email )

Sacramento, CA 95819-6081
United States
916-278-6304 (Phone)
916-278-6544 (Fax)

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