STATE RULES AND LOCAL GOVERNANCE CHOICES

This paper evaluates the impact that states have on local governance decisions. We suggest that when states impose constraints on less politically costly tools for funding local services, cities turn to cooperation with other local governments. Cooperation is politically and administratively less desirable than other solutions to the problems associated with fragmentation: diseconomies of scale and jurisdictional externalities. But when states constrain those other mechanisms, the relative merit of cooperation increases. At the margins, more cities should cooperate and cooperate more deeply in such situations. Using a sample of 3,729 cities across 49 states, we find that in four examples of these policy tool trade-offs, our theory is generally supported