University of Economics in Bratislava, Bratislava, Slovakia
4th International Conference – ERAZ 2018 – KNOWLEDGE BASED SUSTAINABLE ECONOMIC DEVELOPMENT, Sofia- Bulgaria, June 7, 2018, CONFERENCE PROCEEDINGS published by: Association of Economists and Managers of the Balkans, Belgrade, Serbia; Faculty of Business Studies, Mediterranean University – Podgorica, Montenegro; University of National and World Economy – Sofia, Bulgaria; Faculty of Commercial and Business Studies – Celje, Slovenia; Faculty of Applied Management, Economics and Finance – Belgrade, Serbia, ISBN 978-86-80194-12-7
Changing society (population aging, deepening regional disparities, globalization and increasing competition) influence public service requirements. Not only inhabitants but also organisations and other market participants require more services with higher quality, cheaper, more available and more modern.
There is a fragmented structure of public administration in many European countries, including Slovakia. Level of local government is made by municipalities (villages and cities) with different size. In the smallest municipalities there live only to 10 inhabitants, in the third highest municipality Prešov there are about 90 000 inhabitants, while all Slovak municipalities (except for capital Bratislava and second highest city Košice) has equal position, status and competences. It leads to problems of small municipalities that do not have enough money to provide all services in required quality. Some authors recommend them to cooperate or connect to bigger municipalities because of saving money.
The aim of this paper is to find out if there exist economies of scale in providing of public services by local municipalities. We tested it on many provided services represented by individual expenditure groups (by COFOG classification) and on total spending of 138 Slovak municipalities with city status. We used regression method and we found out that economies of scale exist, but only in some expenditure groups. It does not occur in others. The rule of economies of scale is partially valid.
economies of scale, expenditure, municipality
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