Economies of Scale in Municipal Administration. Empirical Analyses of Municipal Mergers

“In an exploratory application for four municipal mergers, we find no evidence for increasing economies of scale. Compared to the level prior to the mergers, average current expenditure for the municipal administration increased more than in a control group of similar municipalities that did not merge.”

Economies of scale in municipal administration are an important argument in the discussion on municipal mergers. However, they are seldom studied empirically. It is suggested here to analyse advantages of scale by municipal mergers. This procedure has a favorable feature compared to previous cross-section analyses, because the number of inhabitants appointed to an administration is immediately increased, whereas the conditions of production are largely unchanged.

Published in Swiss Political Science Review | Simon Lüchinger | 2002