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Special districts have been seen as a formalized institution for promoting regional cooperation. They allow boundary design to the scale of public problems and may produce greater efficiency in the marketplace for local public goods. Many scholars also have highlighted the flexibility of special district boundaries once established, arguing that this flexibility allows for governance that is more adaptable to changing resource constraints and patterns of demand. While flexible boundaries might promote special districts’ ability to internalize spillovers while acting alone, it might impede more ad hoc forms of cooperation among localities. This paper presents evidence that boundary change is a substitute strategy to the establishment of intergovernmental agreements for the resolution of interlocal policy challenges. By allowing special districts with slack resources to expand into new territory, state rules that promote boundary flexibility reduce the likelihood that districts will develop contracting relationships to share their surplus capacity with neighboring governments. The results demonstrate the importance of considering the entire package of coordinating institutions that are available in a given region when we examine how local governments develop solutions to collective action problems.


Public Affairs, Public Policy and Public Administration | Urban Studies and Planning