Economies of Scale and Population Size in Australian Local Government Structural Reform Programs
Author: Brian Dollery
Publisher:
Published: 2007
Total Pages:
ISBN-13:
DOWNLOAD EBOOKA common argument advanced by proponents of Australian local council amalgamation proposals is that 'bigger is cheaper' due inter alia to the existence of substantial economies of scale in local council service provision. This argument typically asserts that local councils with larger populations can provide municipal services at lower costs per unit of output than local authorities with smaller population bases, thereby conflating population size with the theoretically distinct concept of scale economies. This short note examines this argument in the light of standard economic theory. We conclude that it is fallacious to use population size as a proxy for scale economies in Australian local government.