Overcoming the Barriers to Cooperation: Interlocal Service Agreements

Although interlocal cooperation through service sharing agreements has a long history, it has become increasingly popular in recent years. We argue that the decisions of local government units to collaborate through intergovernmental service agreements are best understood as a two stage process. The first stage, in which communities decide whether to consider interlocal cooperation, focuses on the nature of the problem they face and demands for performance and efficiency gains that can result from service cooperation. In the second stage, the cities that consider cooperative arrangements face the problem of institutional supply and must overcome bargaining and collective action problems in order to forge interlocal agreements. Heckman probit estimates of these relationships using data from a 2003 ICMA survey provide strong support for the model. The role of network relationships among local actors in reducing transaction costs and facilitating intergovernmental collaboration is discus