The missing economies of density and south Australian local government efficiency

Sound theoretical grounds exist to assume that economies of density will have pervasive effects on municipal service provision. However, to date the available empirical literature offers inconsistent and confusing findings on the potential impact of density. Moreover, the extant empirical evidence of substantial density economies is unconvincing. This paper investigates this apparent contradiction by addressing (a) significant non-monotonicity in density economies, (b) confusion over density economies through its disparate impact on various municipal activities and (c) underlying differences in how density affects different types of local council. These questions are investigated employing multiple regression analysis using a panel data set covering all 68 South Australian local authorities over the seven-year period from 2014 to 2020. We find evidence of economies of density across the entire data set. We infer that the measurement of population density imposes constraints on identifying density economies and the empirical methodology employed.