The demand for local public services and horizontal inequality in Portugal

The main contribution of this paper is threefold : it estimates a demand fuction for local public services in Portugal based on the median- voter hypothesis. The median voter model has been widely used in the public choice literature.Inspite of its limitations it has provided a theoretical framework for the analysis of local authorities'fiscal decisions. It suggests the use of a normative measure of fiscal inequity between municipalities which is based on an original definition of the concept of horizontal fiscal inequity in a geographicalcontext. It estimates actual fiscal inequity in Portugal by using the suggested indicator and the estimates from the demand function.