The existence of scale economies in the production of local government
services is increasingly questioned by policy makers and academics. I
n place of the old orthodoxy that big is beautiful, a new orthodoxy is
emerging that there are no significant scale effects. However, the em
pirical evidence does not warrant this conclusion. There may be scale
economies in local services, but these relate to the output of service
plants, not the size of the population; and there may be population e
ffects on local performance, but these concern effectiveness and respo
nsiveness rather than efficiency. Thus, economies of scale and populat
ion effects need to be tested separately but considered together in de
cisions on local government reorganisation.