citizens want. Further, the existence of many local governments seems more likely to allow for the differentiated services that a heterogeneous population demands since each government can deliver a different set of services. Alternatively, corruption may be more important for small governments because the person allocating the benefits is closer to the person receiving them (see World Bank, 2003).

A reasonable expectation is that the service levels demanded by the median voter will be produced if service levels are decided by voting. If individual demands exist along a continuum, everyone except the median voter will be dissatisfied, with some wanting more of the service and some wanting less. Assuming that everyone in the municipality receives the same services, small local governments offer the potential for provision of different tax/expenditure packages across places, thereby reducing the degree of dissatisfaction by people, relative to large municipalities.<sup>19</sup> Thus, the expectation of many has been that the efficiency losses from people receiving the wrong set of public services can potentially be kept smaller through disaggregated governments – consolidation would increase efficiency losses. Also, the hope is that the competition between many small local governments, for people, tax base, economic development and so forth, could bring the same market forces to bear in the delivery of public services that exists in provision of private sector goods and services. The potential for residents to move is expected to place pressure on local governments to deliver the services that people demand, to deliver them efficiently and to reduce taxes to benefit charges. The ability of people to move around the region may be much more limited in many developing countries than in countries like the United States.

Of course, people are not without some options to alter their service delivery package even with a consolidated government. Those wanting more can often supplement their receipt of government services with more private services. For example, more locks and burglar alarms can be placed in houses where better safety is demanded and fire alarms and fire extinguishers can be added in houses where additional fire protection is sought. Children can be provided tutors or sent to private schools if more education is demanded. Fewer options are available to reduce service levels if government is delivering more services than are demanded. Those wanting less must still pay the taxes even if they do not want all of the services. Financing service delivery with user fees is one means to lessen the dissatisfaction of people who are demanding few services since low services demanders can opt out of buying the services.

On the other hand, larger local governments may be able to provide more services and this could increase interest in local governments and expand participation in local politics, both by citizens and by prospective council members (see Swianiewicz, 2002). The argument has been made that Northern European local governments undertake more functions than Southern European governments because of the difference in size. Of course, national governments may use small size as an explanation for not devolving more service responsibilities to local governments. On the other hand, citizens in small

> 19 In practice, service levels often differ inside many governments.  For example, higher quality services may be offered in the higher income neighborhoods in the city.

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