Better Alone? Evidence on the Costs of Intermunicipal Cooperation

This paper provides new evidence on why municipalities are often reluctant to integrate. Exploiting a French reform that made intermunicipal cooperation mandatory, I find that municipalities forced to integrate experienced a large increase in construction, consistent with NIMBYism, explaining their resistance and that rural municipalities ended up with fewer local public services. I do not find the same effects for municipalities that had voluntarily integrated prior to the law, while both types of municipality enjoyed similar benefits in terms of public transport and fiscal revenues. These findings support the fact that municipalities resisted to avoid the local costs of integration.