An Elementary Political and Economic Theory of the Expenditures of Local Governments

Abstract

It seems clear that problems in the field of public finance contain both and economic elements. Yet, scientists do not seem to have devoted a major part of their research efforts to the area, and economists traditionally have overlooked the aspects of the problems.' This paper proposes a particular political theory of the expenditures of local governments with the aid of some of the traditional tools of economic analysis, and examines some data referring to the governments of the counties of Pennsylvania in light of the proposed theory. It should be admitted at the outset, however, that the model developed herein is overly simple and, perhaps, naive. Yet, the authors believe that it has explanatory power, despite the fact that it requires the usual economic assumption of full knowledge, and that it represents a step in a desirable direction. Although the conceptual possibility of subjecting the model to a direct is clearly evident, available data do not permit such a test and a sympathetic interpretation of the empirical results requires the admission of additional and rather strict assumptions. Hence, the empirical results do not constitute a convincing test of the major implication but merely serve to indicate that this theory, even when augmented with additional assumptions, seems to add explanatory potential to the standard models.