Abstract
Abstract: This article discusses the smallness of subsidiary jurisdictions as a third dimension of centrality, besides vertical centrality and fragmentation (horizontal centrality). A panel analysis concerning all 26 Swiss cantons (from 1990 to 2003) shows that public expenditure per capita increases with the number of inhabitants of a canton. This holds for the aggregate expenditure level and for six expenditure categories of the Government Finance Statistics. The positive elasticity of per capita expenditure with respect to population size can be understood as an indicator for increasing government failure in jurisdictions with bigger population size.
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