communities have a greater incentive to participate because their vote has relatively more weight and because they are closer to the politicians (see Denters, 2002). Denters finds that trust in local government is negatively related to size of local government based on analysis using data from Denmark, Netherlands, Norway and the United Kingdom.

Tiebout (1956) developed a conceptual framework based on the idea that “consumer-voters” register their preferences for public goods by choosing where to live. The chosen community would be the one that most closely matches the individual’s preferences. It is anticipated within this framework that a larger number of choices is necessary for an individual to find an optimal or exact match for her preferences.<sup>20</sup> Thus, consolidation could limit the competitive forces that would otherwise come into play. Factors including moving costs, employment opportunities and lack of knowledge regarding local government revenues and expenditures may prevent a person from locating in the optimal tax-service community and act as a limitation on the Tiebout effect. A great deal of literature has followed Tiebout’s article, exploring both the implications and testing them empirically.<sup>21</sup> It is very difficult to empirically decompose the efficiency gains that result from competition between local governments and determine whether more local governments lead to greater competition that causes enhancement of efficiency. Although there have been a number of studies, the results have been mixed, causing Dowding et al. (1994) to conclude, “there seems no generalisable deduction that either consolidation or fragmentation is always best.” A few examples of the research are summarized here.

# _<u>Relationship between the Number of Governments and Consumer Satisfaction</u>_

Two streams of research have been used to determine whether more local governments cause service delivery to be more efficient on the demand side: examination of service satisfaction and estimates of whether populations with more local government options live in more homogeneous areas. Survey data have been used to determine satisfaction rates, with the evidence suggesting, though not strongly, that satisfaction levels are higher in smaller jurisdictions, for example, in police services.<sup>22</sup> On the other hand, Derksen (1988) uses Dutch survey data and finds that the proxy for local government quality, administrative capacity, is trivial in determining satisfaction. Newton (1982) also finds size to be irrelevant in terms of effectiveness and democracy.

Lyons and Lowery (1989) argue that previous work is of questionable usefulness because it makes use of aggregate data or data from surveys that were designed for different purposes. The authors collect survey data specifically for addressing Tiebout implications including whether citizens in smaller jurisdictions are more satisfied. Surveys were taken in matched pairs of communities in two metropolitan areas, one with

> 20 It is also assumed that there is a cost minimizing size for local government and that individual location decisions result in municipalities of this size.

> 21 See Dowding et al. (1994) for a survey of the literature.

> 22 See Ostrom and Whitaker, (1973, 1974); Ostrom and Parks, (1973); Ostrom et al., (1977, 1978); Ostrom, (1983a, 1983b, 1985); Parks and Ostrom, (1981); Parks, (1985)

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