Public Choice

, 149:187

Why local governments do not maximize profits: on the value added by the representative institutions of town and city governance


DOI: 10.1007/s11127-011-9835-6

Cite this article as:
Congleton, R.D. Public Choice (2011) 149: 187. doi:10.1007/s11127-011-9835-6


This paper provides an explanation for the lack of profit-maximizing local governments and for the historically widespread use of more or less representative forms of town and city governance. The analytical part of the paper suggests that profit-maximizing governments suffer from a “proprietor’s dilemma,” which can be reduced by including a representative council with veto power over new taxes. Limited but costly mobility plays a role in the analysis, as does the fact that residents often make investments in a town that are difficult to relocate once made.


State and local governance King and council model Tax constitution Productive theories of the state Constitutional political economy Colonial American history 

Copyright information

© Springer Science+Business Media, LLC 2011

Authors and Affiliations

  1. 1.George Mason UniversityFairfaxUSA
  2. 2.West Virginia UniversityMorgatownUSA

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