Several other studies have been conducted on local government efficiency though these may not be used to directly address the relationship between size and efficiency of government. A study of 172 Greek municipalities found that high fees and charges as a percent of income improve efficiency while more grants, greater population density, and political parties that are similar to the central government party decrease efficiency.<sup>16</sup> Technical efficiency was found to decrease with high levels of median income and increase with education and suburban location in a 1998 study of United States municipalities.<sup>17</sup> Fried and Klein (2000) use both statistical analysis and case studies to apply efficiency measures to policy.<sup>18</sup> The authors begin by using inputs and outputs to determine the performance of 290 regions in the United States relative to their region of interest, Albany-Schenectady-Troy, New York. Five different model specifications were used to determine efficiency ratings. Using the best practice methods the same services could be provided in this region for less than half the cost.

From the five specifications a set of five potential “role model” regions was ultimately selected. These regions were identified as operating sufficiently more efficient than Albany-Schenectady-Troy to provide valuable policy insight. From the five regions Fried and Klein sought to identify the reasons for superior performance by examining operating practices that might be transferable. In particular, using the “role model” region of Indianapolis, Fried and Klein identified several practices that make the city more efficient including: 1) privatization of city functions spearheaded by a private sector advisory board, 2) activity based costing for operations such as road repairs, 3) shifting responsibility to the neighborhood level through organizations such as crime watch groups, and 4) a commitment to improving infrastructure.

In sum, the role of efficiency in questions of amalgamation is twofold. First, efficiency studies can be used to determine if increasing size is likely to improve performance. Unfortunately, at this point the research has conflicting results that fail to evidence whether larger governments have greater or lesser efficiency than smaller governments. Second, discovering the causes of inefficiency allows decision-makers to observe problems that will not be solved through amalgamation. In this case, complementary changes in operations may be needed to ensure that the objectives of amalgamation are accomplished.

> 16 Athanassopoulos & Triantis 1998.

> 17 Hayes, Razzolini & Ross (1998).

18 The case study approach is less technical in that it does not use statistical evidence to identify the causes of increased efficiency; it merely identifies those regions that are more efficient. The case study method involves local officials more intimately as they are called upon to narrow the list of perspective “role models.” This involvement may be crucial for successful implementation of new policies as officials have more input and may be less resistant to change. Another advantage of the case study method is that it specifically identifies existing “role models.” Those responsible for writing policy and implementing change are then able to contact counterparts for further information and advice. It appears that the best approach may be a combination. Once the “role models” are identified and evaluated by local officials, statistical analysis should be conducted to determine the causes of the increased efficiency.

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