Common pool problems in voluntary municipal mergers

Tuukka Saarimaa; Janne  Tukiainen

doi:10.1016/j.ejpoleco.2015.02.006

Common pool problems in voluntary municipal mergers

Tuukka Saarimaa, Janne Tukiainen

Not published at Aalto University

Research output: Contribution to journal › Article › Scientific › peer-review

40 Citations (Scopus)

Abstract

We analyze free-riding behavior of Finnish municipalities prior to voluntary municipal mergers. The merger process creates a temporary common pool problem, because of a delay from the initial decision to the actual merger during which municipalities stay autonomous. Using a difference-in-differences strategy, we find that the stronger free-riding incentive a municipality faced the more it increased its debt and spent its cash reserves. These funds were spent mostly on investments and current expenditures.

Original language	English
Pages (from-to)	140-152
Number of pages	13
Journal	European Journal of Political Economy
Volume	38
DOIs	https://doi.org/10.1016/j.ejpoleco.2015.02.006
Publication status	Published - 1 Jun 2015
MoE publication type	A1 Journal article-refereed

Keywords

Common pool
Difference-in-differences
Law of 1/n
Municipality mergers

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10.1016/j.ejpoleco.2015.02.006

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