A Theoretical Analysis of Putative Trade-offs between Local Democracy and Economic Efficiency in Local Government

Abstract

Structural change aimed at local government reform through municipal amalgamation has been the focus of heated debate in the literature for several decades. Debate has centred on whether the consolidation of small local councils into larger local government entities involves inevitable trade-offs between economic efficiency and local democracy. This paper considers the difference perceptions on the implications of structural reform for local council economic efficiency and local government democracy. We propose a theoretical model of local democracy and local efficiency in order to investigate the characteristics of alternative views on the relationship between local democracy and local efficiency in local government.