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Fragmentation of authority defines a first-order problem by creating economies of scale and positive and negative externalities in the provision of local public services. Resolving first-order problems leads to the second-order collective action problem of developing regional institutions that alter the first-order problem in a manner that improves joint outcomes. This paper investigates how regional councils of governments facilitate service cooperation by reducing transaction costs in interlocal service contracting. I focus on the role of the regional governance organizations, the characteristics of services, and political institutions while controlling for service markets and community characteristics. The results suggest that local governments in metropolitan areas can take advantage of regional governance institutions to overcome the barriers to intergovernmental service cooperation. This analysis also reports that interlocal contracting is an important service delivery arrangement for asset specific and difficult to measure services and for council manager cities and mayor council cities with a professional manager position. After discussing the limitations of these analyses, I describe follow-up work focusing on Florida metropolitan cities that address these issues.


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