ECONOMIES OF SCALE IN LOCAL ADMINISTRATION: A CASE STUDY OF BANGKOK METROPOLITAN ADMINISTRATION DISTRICTS
Keywords:
Economies-Of-Scale, Unit Cost Curve, Staff Per Population, Personnel-Related Expense, Bangkok Metropolitan Administration DistrictsAbstract
This paper presents a case study of economies-of-scale in local administration using data from Bangkok Metropolitan Administration Districts (BMADs) based on panel data that comprised of 50 units over the period 1999-2013. Specifically two null hypotheses are empirically tested: i) that the number of staff per 1000 population is positively and linearly related to the proxies for demand for local public services, and ii) that the personnel-related expenditure per capita is positively and linearly related to proxies for demand for local public services. Alternative hypotheses are that the relationships are concave and that the unit cost curves follow a typical U-shaped pattern. A graphical analysis confirms an alternative hypothesis and lends support to an existence of economies-of-scale. The last section discusses policy implication for local amalgamation which is expected to be enforced for some small-sized and financially-weaked municipalities and tambon administrative organizations; anyhow, there should be researches prior to and along with policy reform
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