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The Risks of Intuition: Size, Costs and Economies of Scale in Local Government

Author

Listed:
  • Mark Callanan

    (Institute of Public Administration, Dublin, Ireland)

  • Ronan Murphy

    (Local Government Researcher)

  • Aodh Quinlivan

    (University College Cork; Ireland)

Abstract

Extensive international research surrounds the optimal size of local government and associated issues of amalgamations and economies of scale in local government. Given recent structural reforms of Irish local government, this paper examines both the theoretical debates on these issues and the international experience with local authority mergers in several countries, highlighting the rationale for and some of the reported effects of mergers. It also assesses the relationship between size and expenditure/service levels in Irish local government, drawing on available data. Contrary perhaps to popular belief, county and city councils, the primary units of local government in Ireland, are already very large by international standards. Overall, the research suggests a weak link between size and costs, and that local authority mergers may have limited intrinsic efficiency value and can involve considerable transitional costs. Most local authority services appear to possess limited economies of scale, the main exceptions being specialised services, the production costs of capital-intensive services, and some administrative overheads and "back office" functions.

Suggested Citation

  • Mark Callanan & Ronan Murphy & Aodh Quinlivan, 2014. "The Risks of Intuition: Size, Costs and Economies of Scale in Local Government," The Economic and Social Review, Economic and Social Studies, vol. 45(3), pages 371-403.
    • Handle: RePEc:eso:journl:v:45:y:2014:i:3:p:371-403
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    Cited by:

    1. Peter Abelson, 2016. "The Optimal Size of Local Government, with Special Reference to New South Wales," Agenda - A Journal of Policy Analysis and Reform, Australian National University, College of Business and Economics, School of Economics, vol. 23(1), pages 31-46.
    2. Considine John & Reidy Theresa, 2015. "Baby steps: The expanding financial base of local government in Ireland," Administration, Sciendo, vol. 63(2), pages 119-145, August.
    3. Gerard Turley & John McDonagh & Stephen McNena & Arkadiusz Grzedzinski, 2018. "Optimum Territorial Reforms in Local Government: An Empirical Analysis of Scale Economies in Ireland," The Economic and Social Review, Economic and Social Studies, vol. 49(4), pages 463-488.
    4. Tavares Antonio F., 2018. "Municipal amalgamations and their effects: a literature review," Miscellanea Geographica. Regional Studies on Development, Sciendo, vol. 22(1), pages 5-15, March.
    5. Gerard Turley & Stephen McNena, 2016. "An Analysis of Local Public Finances and the 2014 Local Government Reforms," The Economic and Social Review, Economic and Social Studies, vol. 47(2), pages 299-326.
    6. Quinlivan Aodh, 2017. "Reforming local government: Must it always be democracy versus efficiency?," Administration, Sciendo, vol. 65(2), pages 109-126, May.
    7. Callanan Mark, 2020. "Reforming local government: Past, present and future," Administration, Sciendo, vol. 68(4), pages 201-214, December.

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    Keywords

    local government; economies of scale;

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