Structural Reform: Municipal Mergers



Structural reorganization using municipal mergers is a common form of local government reform. This chapter examines both the theoretical literature and associated empirical work on council consolidation. After briefly discussing the magnitude of amalgamation across the world, this chapter considers the various schools of thought on council consolidation before examining specific dimensions of local government, including scale economies, scope economies, interjurisdictional spillovers, economic development, administrative and strategic capacity and local democracy. Given the various theoretical expectations of the impact of amalgamation, this chapter then considers available empirical evidence on scale and scope economies, interjurisdictional externalities, economic growth, administrative capacity as well as local democracy. This chapter ends by concluding that the weight of empirical evidence indicates that municipal mergers have not met anticipations.


  1. Andrews, R., and G. Boyne. 2009. Size, Structure and Administrative Overheads: An Empirical Analysis of English Local Authorities. Urban Studies 46 (4): 739–759.CrossRefGoogle Scholar
  2. Andrews, R., T. Entwistle, and V. Guarneros-Meza. 2018. Local Government Size and Political Efficacy: Do Citizen Panels Make a Difference? International Journal of Public Administration 42 (8): 664–676.CrossRefGoogle Scholar
  3. Aulich, C. 2005. Australia: Still a Tale of Cinderella? In Comparing Local Governance: Trends and Developments, ed. B. Denters and L.E. Rose. Basingstoke: Palgrave Macmillan.Google Scholar
  4. Bailey, S. 1999. Local Government Economics: Principles and Practice. Basingstoke: Macmillan.CrossRefGoogle Scholar
  5. Bain, J.S. 1951. Relation of Profit Rate to Industry Concentration: American Manufacturing 1936–1940. Quarterly Journal of Economics 65 (2): 293–324.CrossRefGoogle Scholar
  6. Baldersheim, H., and E.R. Lawrence. 2010. Territorial Choice: Rescaling Governance in European States. In Territorial Choice, ed. H. Baldersheim and L.E. Rose, 1–20. Houndmills: Palgrave Macmillan.CrossRefGoogle Scholar
  7. Baumol, W.J., J.C. Panzar, and R.D. Willig. 1982. Contestable Markets and the Theory of Industry Structure. San Diego: Harcourt Brace Jovanovich.Google Scholar
  8. Bel, G., and R. Gradus. 2018. Privatisation, Contracting-Out and Inter-Municipal Cooperation: New Developments in Local Public Service Delivery. Local Government Studies 44 (1): 11–21.CrossRefGoogle Scholar
  9. Bel, G., and M.E. Warner. 2015. Inter-Municipal Cooperation and Costs: Expectations and Evidence. Public Administration 93 (1): 52–67.CrossRefGoogle Scholar
  10. Bhatti, Y., and K.M. Hansen. 2011. Who “Marries” Whom? The Influence of Societal Connectedness, Economic and Political Homogeneity, and Population Size on Jurisdictional Consolidations. European Journal of Political Research 50 (2): 212–238.CrossRefGoogle Scholar
  11. Bikker, J., and D. van der Linde. 2016. Scale Economies in Local Production. Local Government Studies 42 (3): 441–463.CrossRefGoogle Scholar
  12. Bish, R. 2000. Local Government Amalgamations: 19th Century Ideas for the 21st Century. Toronto: Howe Institute.Google Scholar
  13. Blodgett, T. 1996. Current City-County Consolidation Attempts. Washington, DC: National Association of Counties.Google Scholar
  14. Blom-Hansen, J., K. Houlberg, S. Serritzlew, and D. Treisman. 2016. Jurisdiction Size and Local Government Policy Expenditure: Assessing the Effect of Municipal Amalgamation. American Political Science Review 110 (4): 812–831.CrossRefGoogle Scholar
  15. Boadway, R., and A. Shah. 2009. Fiscal Federalism: Principles and Practice of Multi-Order Governance. Cambridge, MA: Cambridge University Press.CrossRefGoogle Scholar
  16. Bordignon, M., F. Cerniglia, and F. Revelli. 2003. In Search of Yardstick Competition: A Spatial Analysis of Italian Municipality Property Tax Setting. Journal of Urban Economics 54 (2): 199–217.CrossRefGoogle Scholar
  17. Boyne, G.A. 1992. Local Government Structure and Performance: Lessons from America? Public Administration 70 (3): 333–357.CrossRefGoogle Scholar
  18. Boyne, G. 1995. Population Size and Economies of Scale in Local Government. Policy and Politics 23 (3): 213–222.CrossRefGoogle Scholar
  19. Boyne, G.A. 1996. Scale, Performance and the New Public Management: An Empirical Analysis of Local Authority Services. Journal of Management Studies 33 (6): 809–826.CrossRefGoogle Scholar
  20. ———. 1998. Public Choice Theory and Local Government. Basingstoke: Macmillan.CrossRefGoogle Scholar
  21. Brennan, G., and J. Buchanan. 1980. The Power to Tax: Analytical Foundations of a Fiscal Constitution. Cambridge, MA: Cambridge University Press.Google Scholar
  22. Breton, A. 1996. Competitive Government. An Economic Theory of Politics and Public Finance. New York: Cambridge University Press.Google Scholar
  23. Brueckner, J.K. 2003. Strategic Interaction Among Governments: An Overview of Empirical Studies. International Regional Science Review 26 (2): 175–188.CrossRefGoogle Scholar
  24. Byrnes, J., and B.E. Dollery. 2002. Do Economies of Scale Exist in Australian Local Government? A Review of the Research Evidence. Urban Policy and Research 20 (4): 319–414.CrossRefGoogle Scholar
  25. Caldas, P., D. Ferreira, B.E. Dollery, and R. Marques. 2018. Economies of Scope in Portuguese Local Government Using an Augmented Hicks-Moorsteen Approach. Regional Studies.
  26. Callanan, M., R. Murphy, and A. Quinlivan. 2012. Myths and Realities of Economies of Scale in Local Government. In Regional Studies Association – Irish Branch. Local Government Reform: Myth or Reality. Symposium, NUI Maynooth, 8 March.Google Scholar
  27. Carr, J.B., and R.C. Feiock. 1999. Metropolitan Government and Economic Development. Urban Affairs Review 34 (3): 476–488.CrossRefGoogle Scholar
  28. ———. 2016. City-County Consolidation and Its Alternatives: Reshaping the Local Government Landscape: Reshaping the Local Government Landscape. London: Routledge.Google Scholar
  29. Corness, R., and T. Sandler. 1986. Theory of Externalities, Public Goods and Club Goods. Cambridge, MA: Cambridge University Press.Google Scholar
  30. Costa, H., L.G. Veiga, and M. Portelo. 2015. “Interactions in Local Governments” Spending Decisions: Evidence from Portugal. Regional Studies 49 (9): 1441–1456.CrossRefGoogle Scholar
  31. Dafflon, B. 2015. The Assignment of Functions to Decentralized Government: From Theory to Practice. In Handbook of Multilevel Finance, 163–199. Cheltenham: Edward Elgar.Google Scholar
  32. Daraio, C., M. Diana, F. Di Costa, C. Leporelli, G. Matteucci, and A. Nastasi. 2016. Efficiency and Effectiveness in the Urban Public Transport Sector: A Critical Review With Directions for Future Research. European Journal of Operational Research 248 (1): 1–20.CrossRefGoogle Scholar
  33. De Borger, B., and K. Kerstens. 1996a. Cost Efficiency of Belgian Local Governments: A Comparative Analysis of FDH, DEA, and Econometric Approaches. Regional Science and Urban Economics 26 (2): 145–170.CrossRefGoogle Scholar
  34. ———. 1996b. Radial and Non-radial Measures of Technical Efficiency: An Empirical Illustration for Belgian Local Governments Using an FDH Reference Technology. Journal of Productivity Analysis 7 (1): 41–62.CrossRefGoogle Scholar
  35. De Borger, B., K. Kerstens, W. Moesen, and J. Vanneste. 1994. Explaining Differences in Productive Efficiency: An Application to Belgian Municipalities. Public Choice 80 (3): 339–358.CrossRefGoogle Scholar
  36. Denters, B., and L. Rose, eds. 2005. Comparing Local Governance: Trends and Developments. Basingstoke: Palgrave Macmillan.Google Scholar
  37. Denters, B., M. Goldsmith, A. Ladner, P.E. Mouritzen, and L. Rose. 2014. Size and Local Democracy. Cheltenham: Edward Elgar.CrossRefGoogle Scholar
  38. Dollery, B.E. 2017. When Push Comes to Shove: Forced Amalgamation in New South Wales Local Government. Paper presented to Local Politics Specialist Group, 67th Political Science Association Annual International Conference, University of Strathclyde, Glasgow, 10 April.Google Scholar
  39. Dollery, B.E., and E. Fleming. 2006. A Conceptual Note on Scale Economies, Size Economies and Scope Economies in Australian Local Government. Urban Policy and Research 24 (2): 271–282.CrossRefGoogle Scholar
  40. Dollery, B.E., and B. Grant. 2011. Economic Efficiency Versus Local Democracy? An Evaluation of Structural Change and Local Democracy in Australian Local Government. Journal of Interdisciplinary Economics 23 (1): 1–20.CrossRefGoogle Scholar
  41. Dollery, B., and L. Robotti, eds. 2008. Theory and Practice of Local Government Reform. Cheltenham: Edward Elgar.Google Scholar
  42. Dollery, B.E., and K. Yamazaki. 2018. Is Bigger Really Better? A Comparative Analysis of Municipal Mergers in Australian and Japanese Local Government. International Journal of Public Administration 41 (9): 725–734.CrossRefGoogle Scholar
  43. Dollery, B.E., L. Crase, and A. Johnson. 2006. Australian Local Government Economics. Sydney: University of New South Wales Press.Google Scholar
  44. Dollery, B.E., B. Grant, and M. Kortt. 2012. Councils in Cooperation: Shared Services and Australian Local Government. Sydney: Federation Press.Google Scholar
  45. Dollery, B.E., M. Kortt, and B. Grant. 2013. Funding the Future: Financial Sustainabilityand Infrastructure Finance in Australian Local Government. Sydney: Federation Press.Google Scholar
  46. Dollery, B.E., M.A. Kortt, and S. De Souza. 2015. Policy Analysis Capacity and Australian Local Government. In Policy Analysis in Australia, ed. B. Head and K. Crowley, 105–120. Bristol: Policy Press.Google Scholar
  47. Drew, J., and B.E. Dollery. 2014. Keeping It In-House: Households Versus Population as Alternative Proxies for Local Government Output. Australian Journal of Public Administration 73 (2): 235–246.CrossRefGoogle Scholar
  48. Drew, J., M. Kortt, and B. Dollery. 2014. Economies of Scale and Local Government Expenditure: Evidence from Australia. Administration & Society 46 (6): 632–653.CrossRefGoogle Scholar
  49. Dur, R., and K. Staal. 2008. Local Public Good Provision, Municipal Consolidation, and National Transfers. Regional Science and Urban Economics 38 (1): 160–173.CrossRefGoogle Scholar
  50. Durning, D. 1989. The Impacts of City County Government Consolidation. Athens: Carl Vinson Institute of Government.Google Scholar
  51. Ellingsen, T. 1998. Externalities vs. Internalities: A Model of Political Integration. Journal of Public Economics 68 (2): 251–268.CrossRefGoogle Scholar
  52. Fahey, G., J. Drew, and B.E. Dollery. 2016. Merger Myths: A Functional Analysis of Scale Economies in New South Wales Local Government. Public Finance and Management 16 (4): 362–382.Google Scholar
  53. Ferguson, C.E. 1969. The Neoclassical Theory of Production and Distribution. London: Cambridge University Press.CrossRefGoogle Scholar
  54. Garcea, J., and E.C.J. LeSage, eds. 2005. Municipal Reform in Canada: Reconfiguration, Re-Empowerment and Rebalancing. Toronto: Oxford University Press.Google Scholar
  55. Grindle, M. 1996. Challenging the State. Cambridge, MA: Cambridge University Press.CrossRefGoogle Scholar
  56. Grosskopf, S., and S. Yaisawarng. 1990. Economies of Scope in the Provision of Local Public Services. National Tax Journal 43: 61–74.Google Scholar
  57. Grossman, G., and Janet I. Lewis. 2014. Administrative Unit Proliferation. American Political Science Review 108 (1): 196–217.CrossRefGoogle Scholar
  58. Guarini, E., F. Magli, and F. Nobolo. 2018. Accounting for Community Building: The Municipal Amalgamation of Milan in 1873–1876. Accounting History Review 28 (1/2): 5–30.CrossRefGoogle Scholar
  59. Guerrini, A., G. Romano, C. Leardini, and M. Martini. 2015. The Effects of Operational and Environmental Variables on Efficiency of Danish Water and Wastewater Utilities. Water 7 (7): 3263–3282.CrossRefGoogle Scholar
  60. Haneda, S., A. Hashimoto, and T. Tsuneyoshi. 2012. Evaluating Administrative Efficiency Change in the Post-Merger Period: A Study on Ibaraki Prefecture (1979–2004). International Regional Science Review 35 (2): 237–262.CrossRefGoogle Scholar
  61. Hirschman, A.O. 1970. Exit, Voice and Loyalty. Cambridge, MA: Cambridge University Press.Google Scholar
  62. Holcombe, R., and D. Williams. 2009. Are There Economies of Scale in Municipal Government Expenditures? Public Finance and Management 9 (3): 416–438.Google Scholar
  63. Holmstrom, B., and J. Roberts. 1998. The Boundaries of the Firm Revisited. Journal of Economic Perspectives 12 (4): 73–94.CrossRefGoogle Scholar
  64. Holzer, M., J. Fry, E. Charbonneau, G. Van Ryzin, T. Wang, and E. Burnash. 2009. Literature Review and Analysis Related to Optimal Municipal Size and Efficiency. School of Public Affairs and Administration, Rutgers University, Newark. Available at & _efficiency.pdf
  65. Isen, A. 2014. Do Local Government Fiscal Spillovers Exist? Evidence from Counties, Municipalities, and School Districts. Journal of Public Economics 110 (1): 57–73.CrossRefGoogle Scholar
  66. Kalb, A., B. Geys, and F. Heinemann. 2012. Value for Money? German Local Government Efficiency in a Comparative Perspective. Applied Economics 44: 201–218.CrossRefGoogle Scholar
  67. Keating, M. 1995. Size, Efficiency and Democracy: Consolidation, Fragmentation and Public Choice. In Theories of Urban Politics, ed. D. Judge, G. Stoker, and H. Wolman, 117–135. London: Sage.Google Scholar
  68. King, D. 1984. Fiscal Tiers: The Economics of Multilevel Government. London: George Allen and Unwin.Google Scholar
  69. Kuhlmann, S., and G. Bouckaert. 2016. Local Public Sector Reforms in Times of Crisis. London: Palgrave Macmillan.CrossRefGoogle Scholar
  70. Kushiner, J., and D. Siegel. 2008. Are Services Delivered More Efficiently After Municipal Amalgamations? Canadian Public Administration 48 (2): 251–267.CrossRefGoogle Scholar
  71. Lago-Penas, S., and J. Martinez-Vazquez, eds. 2013. Challenge of Local Government Size. Cheltenham: Edward Elgar Press.Google Scholar
  72. Leon-Moreta, A. 2015. Municipal Incorporation in the United States. Urban Studies 52 (16): 3160–3180.CrossRefGoogle Scholar
  73. Marques, R., and De Witte, K. (2011). “Is Big Better? On Scale and Scope Economies in the Portuguese Water Sector,” Economic Modelling, 28: 10091016.CrossRefGoogle Scholar
  74. Mason, E.S. 1949. The Current State of the Monopoly Problem in the United States. Harvard Law Review 62 (4): 1265–1285.CrossRefGoogle Scholar
  75. McDonnell, J. 2019. Municipality Size, Political Efficacy and Political Participation: A Systematic Review. Local Government Studies
  76. Miyazaki, T. 2018. Internalization of Externalities and Local Government Consolidation: Empirical Evidence from Japan. Empirical Economics 54 (3): 1061–1086.CrossRefGoogle Scholar
  77. Mussari, R., and P. Ruggiero. 2017. Merging for Capacity and a Capacity for Merging: Politicians, Citizens, and Discourses in Public Administrations. Financial Accountability and Management 33 (1): 27–47.CrossRefGoogle Scholar
  78. Narbón-Perpiñá, I., and K. De Witte. 2018a. “Local Governments” Efficiency: A Systematic Literature Review—Part I. International Transactions in Operational Research 25 (2): 431–468.CrossRefGoogle Scholar
  79. ———. 2018b. “Local Governments” Efficiency: A Systematic Literature Review—Part II. International Transactions in Operational Research 25 (4): 1107–1136.CrossRefGoogle Scholar
  80. Oakerson, R. 1999. Governing Local Public Economies: Creating the Civic Metropolis. Oakland: ICS Press.Google Scholar
  81. Oates, W.E. 1972. Fiscal Federalism. New York: Harcourt Brace Jovanovich.Google Scholar
  82. ———. 1999. An Essay on Fiscal Federalism. Journal of Economic Literature 37: 1120–1149.CrossRefGoogle Scholar
  83. OECD. 2019. Subnational Governments in OECD Countries: Key Data 2018 Edition. Accessed 11 Apr 2019.
  84. Organization for Economic Co-operation and Development/United Cities and Local Governments (OECD/UCLG). 2016. Subnational Governments Around the World: Structure and Finance. Paris: OECD.Google Scholar
  85. Ostrom, V., C. Tiebout, and R. Warren. 1961. The Organization of Government in Metropolitan Areas: A Theoretical Inquiry. American Political Science Review 55 (4): 831–842.CrossRefGoogle Scholar
  86. Panzar, J.C., and R.D. Willig. 1981. Economies of Scope. American Economic Review 71 (2): 268–272.Google Scholar
  87. Pérez-López, G., D. Prior, J.L. Zafra-Gómez, and A.M. Plata-Díaz. 2016. Cost Efficiency in Municipal Solid Waste Service Delivery. Alternative Management Forms in Relation to Local Population Size. European Journal of Operational Research 255 (2): 583–592.CrossRefGoogle Scholar
  88. Polidano, C. 2000. Measuring Public Sector Capacity. World Development 28 (5): 805–822.CrossRefGoogle Scholar
  89. Sancton, A. 2000. Merger Mania. Montreal: McGill-Queen’s University Press.Google Scholar
  90. ———. 2011. Canadian Local Government: An Urban Perspective. Toronto: Oxford University Press.Google Scholar
  91. Shah, A., ed. 2006a. Local Governance in Industrial Countries. Washington, DC: World Bank.Google Scholar
  92. ———. 2006b. Chapter 1: The New Vision of Local Governance and the Evolving Roles of Local Governments. In Local Governance in Industrial Countries, ed. A. Shah, 1–46. Washington, DC: World Bank.CrossRefGoogle Scholar
  93. Swianiewicz, P. 2010. If Territorial Fragmentation Is a Problem, Is Amalgamation a Solution? An East European Perspective. Local Government Studies 36 (2): 183–203.CrossRefGoogle Scholar
  94. ———. 2018. If Territorial Fragmentation Is a Problem, Is Amalgamation a Solution? – Ten Years Later. Local Government Studies 44 (1): 1–10.CrossRefGoogle Scholar
  95. Tang, Wei, and G.J.D. Hewings. 2017. Do City–County Mergers in China Promote Local Economic Development? The Economics of Transition 25 (3): 439–469.CrossRefGoogle Scholar
  96. Tavaris, A.F. 2018. Municipal Amalgamations and Their Effects: A Literature Review. Miscellanea Geographica – Regional Studies in Development 22 (1): 5–15.CrossRefGoogle Scholar
  97. Tiebout, C. 1956. A Pure Theory of Local Public Expenditures. Journal of Political Economy 64 (2): 416–424.CrossRefGoogle Scholar
  98. Tomkinson, R. 2007. Shared Services in Local Government. Aldershot: Gower Publications.Google Scholar
  99. Van Houwelingen, P. 2017. Political Participation and Municipal Population Size: A Meta-Study. Local Government Studies 43 (3): 408–428.CrossRefGoogle Scholar
  100. Vojnovic, I. 1997. Municipal Consolidation the 1990s: An Analysis of Five Canadian Municipalities. Toronto: ICURR Press.Google Scholar
  101. Wildasin, D.E. 1986. Urban Public Finance. Chur: Harwood.Google Scholar

Copyright information

© The Author(s) 2020

Authors and Affiliations

  1. 1.School of BusinessUniversity of New EnglandArmidaleAustralia
  2. 2.Department of EconomicsTrent UniversityPeterboroughCanada
  3. 3.University of AlbertaEdmontonCanada
  4. 4.Governance StudiesBrookings InstitutionWashington, DCUSA

Personalised recommendations