| Chapter 1: | Introduction |
county in Indiana and the surrounding states. If G-inefficiencies exist, expenditures per capita will be higher in counties with a higher number of government jurisdictions. These higher expenditures may result from coordination problems, managerial inefficiency, or other factors. Our empirical work found strong evidence of G-inefficiencies in police services. Across our entire sample of communities, we found that each additional local government unit in a county increased the per-person annual expenditures for police protection services by $1.10 per person. Our cross-state analysis suggests that Indiana residents, on a per capita basis, pay from $12 to $43 less on an annual basis than do residents of other states. For fire services, we found that each additional local government unit in a county increased the per-person annual expenditures for fire protection services by 87 cents per year.
In chapter 6, we examine the presence of scale economies for a number of other services: sewerage, solid waste management, public welfare, administration, and health services. At least one of these—sewerage—is a classic example of a natural monopoly, in which high fixed costs and hence scale economies are the primary feature of production. For small municipalities (population < 25,000), we found evidence of potential savings from economies of scale for solid waste employment in the Midwest, South, and Southwest as well as for housing and community development employment (Midwest and Southwest), sewerage expenditures (Midwest and South), employment in administration (Midwest and South), parks and recreation employment (Midwest), and health and hospitals (South). We found support for savings due to efficiency improvements for sewerage and administration in both the Midwest and the Southwest, although the savings from the consolidation of administrative functions in the Midwest would accrue only in large counties (population > 100,000).
In chapter 7, we examine K–12 education and libraries. Using data from 2007, we examined the presence of scale economies and G-inefficiency in the provision of library services in Indiana using data on Indiana's 238 separate library districts. We used circulation as a measure of output in our scale economies estimate and found significant economies of scale for