Population size or population density? An empirical examination of scale economies in South Australian local government, 2015/16. Issue 5 (3rd September 2019)

• Record Type: Journal Article
• Authors: Tran, Carolyn; Kortt, Michael; Dollery, Brian
• Is Part Of: Local government studies. Volume 45:Issue 5(2019)
• Page Start: 632
• Page End: 653
• Publication Date: 2019-09-03
• Subjects: Amalgamation -- economies of scale -- local government -- population density -- population size; Local government -- Great Britain -- Periodicals; Local government -- Periodicals; 352.042
• DOI: 10.1080/03003930.2018.1501364
• Languages: English
• ISSNs: 0300-3930

Abstract

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.