¹ Classic examples of the bargaining literature include Dahl, Robert, Who Governs? (New Haven: Yale University Press, 1961)Google Scholar, Banfield, Edward, Political Influence (New York: Free Press, 1961)Google Scholar and Agger, Robert, Goldrich, Daniel and Swanson, Bert, The Rulers and the Ruled (New York: Wiley, 1964).Google Scholar

² Lineberry, Robert and Fowler, Edmund P., ‘Reformism and Public Policies in American Cities’, American Political Science Review, LXI (1967), 701–16.CrossRefGoogle Scholar

³ Clark, Terry N., ‘Community Structure, Decision Making, Budget Expenditures, and Urban Renewal in 51 American Communities’, American Sociological Review, XXXIII (1968), 576–93.CrossRefGoogle Scholar

⁴ Weicher, John C., ‘Determinants of Central City Expenditures – Some Overlooked Factors and Problems’, National Tax Journal, XLIII (1970), 379–96.Google Scholar

⁵ Fabricant, Solomon, The Trend of Government Activity in the United States since 1900 (New York: National Bureau of Economic Research Inc., 1952)Google Scholar; Brazer, Harvey S., City Expenditures in the United States (New York: National Bureau of Economic Research, Occasional Papers No. 66, 1959).Google Scholar

⁶ Dye, Thomas, Politics, Economics and the Public: Policy Outcomes in the American States (Chicago: Rand McNally, 1966).Google Scholar

⁷ My approach is quite different. From the perspective of the unitary model, political variables are assumed to be unimportant. State and local units of government are presumed to be unitary systems that rationally respond to environmental conditions with policies that maximize their economic well-being. To test the model the relative importance of various environmental variables is examined; political variables are left out of the equation altogether. Therefore, it is appropriate to use findings from research that has solved the unit-of-analysis problem by aggregating the combined expenditures of state and local governments at the state level. I discuss these methodological issues in greater detail in ‘The Politics of Taxation and Expenditure: A Unitary Approach’ (paper presented at the meeting of the American Political Science Association, New York City, 09 1978, Appendix A).Google Scholar

⁸ I explore the relative merits of bargaining and unitary models in School Politics Chicago Style (Chicago: University of Chicago Press, 1976).Google Scholar

⁹ See also Allison, Graham, Essence of Decision: Explaining the Cuban Missile Crisis (Boston: Little, Brown, 1971).Google Scholar

¹⁰ See Weber, 's ‘Class, Status, and Power’ in Gerth, H. H. and Mills, C. W., eds., From Max Weber (New York: Oxford University Press, 1958).Google Scholar

¹¹ U.S. Department of Commerce: Bureau of the Census, ‘Local Government Finances in Selected Metropolitan Areas and Large Counties: 1974–75’ (Government Finances/GF 75, No. 6, 1976).Google Scholar

¹² Gates, Wallace E., ‘The Effects of Property Taxes and Local Public Spending on Property Values: An Empirical Study of Tax Capitalization and the Tiebout Hypothesis’, Journal of Political Economy, LXXVII (1969), 957–71Google Scholar; and Pollakowski, Henry O., ‘The Effects of Property Taxes and Local Public Spending on Property Values: A Comment and Further Results’, Journal of Political Economy, LXXXI (1973), 994–1003.CrossRefGoogle Scholar

¹³ Oates, Wallace E., ‘Effects of Property Taxes and Local Public Spending on Property Values: A Reply and Further Results’, Journal of Political Economy, LXXXI (1973), 1004–1008CrossRefGoogle Scholar; Pollakowski, , ‘The Effects of Property Taxes and Local Public Spending’;Google ScholarMcDougall, G. S., ‘Local Public Goods and Residential Property Values: Some Insights and Extensions’, National Tax Journal, XXIX (1976), 436–47Google Scholar; King, A. T., ‘Estimating Property Tax Capitalization: A Critical Comment’, Journal of Political Economy, LXXXV (1977), 425–31CrossRefGoogle Scholar; and Rosen, H. S. and Fullerton, D. J., ‘A Note on Local Tax Rates, Public Benefit Levels and Property Values’, Journal of Political Economy, LXXXV (1977), 433–40.CrossRefGoogle Scholar

¹⁴ Cebula, Richard J., ‘Local Government Policies and Migration: An Analysis for SMSAs in the United States’, Public Choice, XIX (1974), 85–94.CrossRefGoogle Scholar

¹⁵ Babcock, Richard F., The Zoning Game (Madison: University of Wisconsin Press, 1966)Google Scholar; Mills, Edwin S. and Oates, Wallace E., Fiscal Zoning and Land Use Controls (Lexington, Mass.: D. C. Heath, 1975).Google Scholar

¹⁶ Tiebout, Charles M., ‘A Pure Theory of Local Government’, Journal of Political Economy, LXIV (1956), 416–24.CrossRefGoogle Scholar

¹⁷ Just how inefficient this can be is demonstrated by a comparison of the relative costs of public and private garbage collection in New York City. Even though the conditions for collection are more or less the same, the costs of public collection are double those in the private sector. See Savas, E. S., ‘Municipal Monopolies Versus Competition in Delivering Urban Services’Google Scholar, in Hawley, Willis D. and Rogers, David, eds., Urban Affairs Annual Review, Vol. VIII ‘Improving the Quality of Urban Management’ (Beverley Hills, Calif.: Sage Publications, 1974), pp. 473–500.Google Scholar

¹⁸ Even this may not be the correct way of making the point unless one takes into account both direct and indirect contributions to tax coffers. A local firm may be exempt from any direct local taxes, but it may nonetheless be important to the local economy and thus indirectly a most important taxpayer. Were it to leave the community, the fiscal resources of the area would be adversely affected.

¹⁹ Meltsner, Arnold J., The Politics of City Revenue (Berkeley: University of California Press, 1971.Google Scholar

²⁰ Advisory Commission on Intergovernmental Relations, Local Revenue Diversification: Incomes, Sales Tax and User Charges (Washington, DC: U.S. G.P.O., October 1974).Google Scholar

²¹ Netzer, Dick, Economics of the Property Tax (Washington, D.C.: Brookings, 1966).Google Scholar

²² Advisory Commission on Intergovernmental Relations, Local Revenue Diversification, p. 55.Google Scholar

²³ For a comparison, see Musgrave, Richard A., The Theory of Public Finance (New York: McGraw-Hill, 1959)Google Scholar, who distinguishes among allocation, redistribution and stabilization policies. Also see Lowi, Theodore J., ‘American Business, Public Policy, Case Studies and Political Theory’, World Politics, XVI (1964), 677–715.CrossRefGoogle Scholar

²⁴ Gates, Wallace E., Fiscal Federalism (New York: Harcourt, Brace and World, 1972).Google Scholar

²⁵ Piven, Frances, ‘The Urban Fiscal Crisis’, in David, Stephen and Peterson, Paul E., eds., Urban Politics and Public Policy, 2nd edn. (New York: Praeger, 1976).Google Scholar

²⁶ I have included general control expenditures among the housekeeping services of government, and it is this that accounts for the 3·8 per cent of federal expenditures on allocational activities.

²⁷ State and local government deficit spending does not have the counter-cyclical effects that federal deficits are expected to have. See Hansen, Alvin H. and Perloff, Harvey S., State and Local Finance in the National Economy (New York: Norton, 1944)Google Scholar; Sharp, Ansel M., ‘The Behaviour of Selected State and Local Government Fiscal Variables during the Phases of the Cycles, 1949–1961’, Proceedings of the National Tax Association (1965), 599–613Google Scholar; and Rafuse, Robert W. Jr., ‘Cyclical Behavior of State-Local Finances’, in Musgrave, Richard A., ed., Essays in Fiscal Federalism (Washington, DC.: Brookings, 1965)Google Scholar. Consequently, it is not appropriate to classify local interest payments as expenditures for developmental policies unless the project that the debt financed ‘paid for itself’.

²⁸ I have discussed this problem more fully in ‘Equality, Efficiency and Big City Schools’, a paper presented at the meeting of the American Educational Research Association, San Francisco, April 1979. In that paper I conclude that education is a marginally redistributive policy area.

²⁹ Thus, variations among states in expenditures as a percentage of state income is much less than variation in expenditures uncontrolled for income differences. In 1973, for example, state and local monies spent on public services as a percentage of the personal income earned by state residents varied only modestly. The coefficient of variation was ·12. By contrast the coefficient of variation for expenditure per capita (uncontrolled for income differences) was a substantial ·36. When federal aid was included, this coefficient declined only slightly to ·32 (data computed from Maxwell, James A. and Aronson, Richard, Financing State and Local Governments (Washington, D.C.: Brookings Institution, 1977)Google Scholar, Tables A–7, A–9).

³⁰ A discussion of methodological problems can be found in Peterson, , ‘The Politics of Taxation and Expenditure’, Appendix A.Google Scholar

³¹ The hypotheses are also supported by many other studies of expenditure policies. Although these studies have been cast within other conceptual frameworks, their specific findings, when placed within the framework of the unitary model, yield patterns of correlation similar to those reported here. Space precludes presentation of this supporting evidence; see Peterson, , ‘The Politics of Taxation and Expenditure’Google Scholar and Peterson, Paul E., City Limits, in preparation.Google Scholar

³² I explore the many implications of these and other findings generated by the unitary model in Peterson, , City Limits.Google Scholar

³³ Hunter, Floyd, Community Power Structure (Chapel Hill: University of North Carolina Press, 1953)Google Scholar; Bachrach, Peter and Baratz, Morton S., ‘Two Faces of Power’, American Political Science Review, LVI (1962), 947–52.CrossRefGoogle Scholar

³⁴ McConnell, Grant, Private Power and American Democracy (New York: Knopf, 1966).Google Scholar

³⁵ Peterson, Paul E., ‘Redistribution Policies and Patterns of Citizen Participation in Local Politics’, in Sharps, L. J., ed., Decentralist Trends in Western Democracies (Beverly Hills, Calif.: Sage Publications, forthcoming).Google Scholar