Charging for public services: the case of utilities in Norwegian local governments

This paper empirically analyzes the determinants of utility charges using a panel data set for a sample of Norwegian local governments. There is stron g evidence of revenue substitution in the sense that local governments incr ease their utility charges when other sources of revenue (lump-sum grants a nd regulated tax revenue) become more restricted. Moreover, local political institutions are shown to be important: a high share of socialist represen tatives in the local council leads to high utility charges, whereas a stron g political leadership is able to keep utility charges low. (C) 2000 Elsevi er Science B.V. All rights reserved.