The Uneven Distribution of Market Solutions for Public Goods

AbstractUsing national data on local government service delivery from 1992 and 1997, this article assesses the distribution of privatization and inter–municipal cooperation across localities in the metropolitan region and finds them most common among suburbs. Coasian economics argues market solutions may offer an alternative to regional government in the fragmented metropolitan area. However, our discriminant analysis shows the use of market solutions is highest in suburban communities that also exhibit high income and low poverty. Thus, market solutions appear to reflect the inequality among municipalities in the metropolitan region. Some system of regional market governance is still needed to internalize the costs arising from regional inequality in public service delivery.