Geoffrey Brennan and James M. Buchanan, in their 1980 book The Power to Tax, hypothesize that “the potential for fiscal exploitation varies inversely with the number of competing governmental units in the inclusive territory.” This paper tests that theory at the local level using data for US...

This paper applies the insights of Austrian economics to an important issue in local political economy. Basic economic theory holds that greater competition produces superior outcomes in private goods markets. The same should be true in the “markets” for the output of local government....