Population size or population density? An empirical examination of scale economies in South Australian local government, 2015/16

Author(s)
Tran, Carolyn
Kortt, Michael
Dollery, Brian
Publication Date
2019
Abstract
Advocates of amalgamation typically claim that substantial scale economies flow from municipal mergers, which generate larger local government entities by population size. We examined whether economies of scale exist in council outlays by analysing the expenditure of 68 South Australian local government areas using data from the 2015/16 financial year. However, given the correlation between population size and population density it is important to determine whether the influence of population size on expenditure is due to variations in population density. We find that when local government areas are stratified into subgroups on the basis of population density, the evidence of economies of scale largely evaporates. From a policy perspective, this suggests that in place of municipal mergers, policymakers should instead explore avenues for shared service arrangements in those functions which exhibit scale economies.
Citation
Local Government Studies, 45(5), p. 632-653
ISSN
1743-9388
0300-3930
Link
Publisher
Routledge
Title
Population size or population density? An empirical examination of scale economies in South Australian local government, 2015/16
Type of document
Journal Article
Entity Type
Publication

Files:

NameSizeformatDescriptionLink