A Transactions Costs Model of Metropolitan Governance: Allocation Versus Redistribution in Urban America

Abstract

The apparent hegemony of the public-choice approach to metropolitan governance has been sharply challenged on a number of fronts during the 1990s with a series of new arguments for consolidation emphasizing the role of boundaries in defining interests and property rights so as to structure the distribution of political transactions costs within metropolitan areas. These new arguments have yet to be organized, however, into a coherent critique of the public-choice approach. This article provides such a statement. First, the nature of individual decision making implicit within the new case for metropolitan consolidation is examined. Second, its core institutional propositions on boundaries are discussed. And third, the key outcome hypotheses flowing from the new consolidationist case's assumptions about institutions and individual choice are evaluated in light of the public-choice case for jurisdictional fragmentation.