As a key component of territorial governance in Europe, intermunicipality offers municipalities the opportunity to exercise and collectively fund some local public goods or services. In accordance with the decentralisation theorem, the choice made by municipalities to transfer some competences to the intermunicipal level ought to be based on a trade-off between economies of size and the cost of spatial heterogeneity of citizens’ preferences. In order to empirically test this assertion, a probit model is estimated focusing on those French intermunicipalities with own fiscal powers, looking specifically at 10 various competences. Four main results are highlighted: (i) the heterogeneity of citizens’ preferences is holding back the transfer of competences from municipalities to the intermunicipal level; (ii) economies of size and the need to coordinate local public choices predetermine certain competences to be exercised at intermunicipal level; (iii) intermunicipalities made up of small municipalities are more likely to be entrusted with certain competences; (iv) the decision to transfer competences to the intermunicipal level is influenced by the decisions made by neighbouring intermunicipalities.

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Frère, Q. & Védrine, L. (2017). Does the decentralisation theorem apply to the French local governments? An empirical test on intermunicipal competences. Economie et Statistique / Economics and Statistics, 497-498, 43-64.
https://doi.org/10.24187/ecostat.2017.497d.1929