The influence of population size on the relevance of demand or supply models for local public goods: Evidence from France

The relevance of models explaining local public expenditure behaviour may depend upon the size of the population of municipalities. To refine this intuition, the paper puts two alternative specifications in competition, one from the demand side and the other from the supply side. The data set includes 14,900 French municipalities for 1998. The econometric methodology uses a data-sorting method developed to test whether the responsiveness of local governments to voters is stable across small-size and large-size municipalities. It appears that the median-voter model is rejected for the 1,579 municipalities with more than 5,000 inhabitants, for which a supply-driven model fits better.