Is there a "zoo effect" in French local governments?

Summary From the observation that many public goods –such as zoos– are indivisible, OATES (1988) put forward the idea that the range of public goods should increase with localities’ size. this is the “zoo effect”. But despite this argument appears obvious, it suffers from a limited empirical literature. Therefore, the purpose of the present paper is to test this theoretical argument using data on French inter-municipalities, i.e. local governments that gather several municipalities together in order to manage some local goods. Depending on their spatial position, we split our data set into three groups: urban, suburban and rural inter-municipalities. Using spatial econometrics, estimation results provide evidence for the existence of a zoo effect in French inter-municipalities. In other terms, we find that the variety of services provided in larger inter-municipalities exceeds those in smaller communities. Moreover, the intensity of the zoo effect depends on the urban-rural gradient. It is less intense in the suburban and rural areas than in the urban communities.