Scale and Spatial Institutions of Government

Spatial institutions of government vary greatly across countries. First, some countries adopted a strict vertical hierarchy while some others have a system of autonomous governments. Second, in the case of autonomous governments, spatial scale appears to be negatively associated with government specialization. This paper lays out a theoretical framework for analyzing the relationship between spatial scale and institutions of government. In particular, I argue that, at small spatial scale, the political hold-up problem makes it important to integrate property owners and the provider of local public goods in the form of autonomous government. At large scale, it is more practical to reduce uncertainty in the provision of public goods through vertical hierarchy. Citizenship rather than property ownership becomes important to government at large scale due to low inter-area mobility. Besides, single-purpose government is a more efficient form of integration than general-purpose government. That is the main reason for government specialization at local scale.