Central and Local Divergent Preferences in the Municipal Service Delivery

The design of municipal modes of service delivery is not an unconstrained choice. The vertical organization of public sector relies on the distribution of responsibilities among the different levels of government. The autonomy of local government depends, on one hand, on the willingness of the central government to transfer powers; and, on the other hand, on framing the discretionary powers entitled to local governments. Considering their different political contexts, central and local government preferences’ may diverge, depending on the assessment of what can maximize their utility function. This may, ultimately, result in a clash between the two sets of political actores. This paper builds on Horn’s model of the organization of the public sector (1995) and extends it to the framing of the governance structures of the municipal service delivery. In order to do so, we added an additional layer of political decision corresponding to the central government and adapted the span of choices for municipal service delivery. We argue that the decision for the governance structures of the municipal service delivery results from a complex evaluation of political transaction costs made by a set of two political players: (i) Central Government - which sets the the rules of the game (North 1990); (ii) Local Government - that chooses over the the governing structures (Williamson 1996); as well as other players such as bureaucrats and citizens.