ALLOCATIVE INEFFICIENCY AND LOCAL-GOVERNMENT

J. K. Brueckner (Journal of Public Economics, 19, 311-331, 1992; 11, 2 23-245, 1979) demonstrated that hedonic estimates of property values c an be used to test for allocative efficiency in local government. Howe ver, previous applications of his technique have incorporated data fro m multiple labor markets, introducing the possibility that governmenta l amenities might have been capitalized into wage differentials rather than property values. This analysis applies his approach to data from a single metropolitan area. The estimation suggests that local govern ments do not systematically overprovide any public services and may un derprovide highway services. (C) 1995 Academic Press, Inc.