Does coordination among assessing units generate returns to scale? : evidence from New York State

This paper explores (dis-)economies of scale in property value assessment via cooperative agreements among small tax assessing jurisdictions without consolidation. New York State incentivizes small neighboring towns to unify their assessment function while maintaining respective tax authority; we test whether such coordination reduces assessment expenditure. We apply the cost function approach, include instruments (border intersection and prior cooperation in service provision) to address potential bias in selecting coordination partners, and use 2003- 2014 administrative data for analyses. Results show that coordination increases adjustment costs for small jurisdictions but reduces unit costs among relatively large ones. This study contributes to the returns-to-scale literature in service provision, especially to property tax administration.