Competition, Monopoly, and the Organization of Government in Metropolitan Areas

TLDR: There are two primary structural features of the organization of government in metropolitan areas as mentioned in this paper, i.e., fragmentation of governments and overlapping of governments, which is referred to the provision of the same service or services by a multitude of governments.

Abstract: often suggested that governments, by virtue of their being democratic, can be treated as if they were perfectly competitive suppliers of public output. By contrast, there are other strands of thought suggesting that governments are captured by and operated for the benefit of self-interested bureaucrats, and are more appropriately viewed as monopolistic suppliers of public output, or at least as potential monopolists.' This paper examines these alternative perspectives on government, using as a vehicle an examination of the budgetary consequences of certain types of changes in the organization of government in metropolitan areas. There are two primary structural features of the organization of government in metropolitan areas. One is the fragmentation of governments, and the other is the overlapping of governments. The fragmentation of governments refers to the provision of the same service or services by a multitude of governments. Fragmentation means that such services as police, fire, and recreation will normally be provided by a large number of mutually exclusive municipal corporations. Similarly, educational services will normally be provided by a large number of school districts.2 Governmental fragmentation would seem to be substantial. For instance, over one-half of the metropolitan areas with population exceeding 250,000 according to the 1967 Census of Governments contained more than 100 units of government. The overlapping of governments refers to the independent supply of separate components of public output by different units of government. Hence,