Municipal Fragmentation and Local Financial Condition

A sizeable literature investigates how intergovernmental competition affects various fiscal outcomes in a fragmented local landscape. However, it remains untested how the fragmentation affects the outcomes simultaneously. This study addresses the issue by condensing individual outcomes into a multifaceted concept of financial condition. Utilizing a pooled cross-sectional time-series approach on the metropolitan statistical areas in the U.S between 1972 and 2017, this study tests how financial condition of municipalities varies by competition among them. The finding exhibit adverse effects on their financial condition when a greater number of municipalities is identified.

Intergovernmental Relations

Intergovernmental relations between the Scottish and UK governments are conditioned by path dependence from the pre-devolution arrangements, for example, in finance. They are also conditioned by the UK’s (uncodified) constitutional arrangements, such that the Sewel Convention has played a role, one which its authors might not have contemplated. Models of dual, co-operative, and competitive federalism are used to analyse the changing nature of intergovernmental relations. A dual federalism mode, under which governments get on with their own business, has developed into a mixture of co-operative and competitive relations. Achievements of co-operation include day-to-day official co-operation, but also intergovernmental agreement on major and difficult issues, such as holding an independence referendum, and the implementation of radical devolution of taxation and welfare. Intergovernmental competition includes political competition for votes, and economic competition through different packages of tax and welfare. Constitutional change has been a defining feature of intergovernmental relations over the last ten years. The chapter concludes by identifying some possible future trends—increasing economic and political competition, coupled with increasing demands for detailed co-operation over new powers—and the options for codifying and strengthening intergovernmental relations.

Political Failures and Intergovernmental Competition

In normative public economics, intergovernmental competition is usually viewed as harmful. Although empirical support for this position does not abound, market integration has intensified competition among developed countries. In this paper we argue that when assessing welfare effects of intergovernmental competition for various forms of political failures (the public choice critique), the outcome is ambiguous and competition can be welfare improving.