Local government growth from a tri-sector perspective

Abstract

ABSTRACT This study seeks to explain government growth from a tri-sector perspective. Specifically, it examines how the for-profit and nonprofit sectors impact government growth. Market failure theory predicts an inverse relationship between for-profit sector size and government size. Theories of government failure and nonprofit advantage also predict an inverse size relationship between the nonprofit sector and government. Analysis of panel data from Idaho localities, 1996–2014, confirms the inverse relationship between for-profit sector size and government size, and that between nonprofit sector size and government size, as expected by theory. This study contributes to the literature on public administration, governance, and nonprofit and government relations by demonstrating the relevance of the tri-sector perspective on government growth and the active role of nonprofits in relation to government.