Recent research has analyzed the relationships between the governmental structure in an urban area, the degree of competition in the local public services market, and service provision efficiency (Martin and Wagner, 1978; Wagner and Weber, 1975; Mehay, 1981). With few exceptions, this literature has been content to focus on traditional units of local government municipalities, counties, and school districts and has ignored special districts.1 However, the changing pattern of local governmental organization indicates that this is a serious omission in the literature. Of all local jurisdictions, only special districts have increased significantly in numbers in recent years.2 The purpose of this paper is to provide a positive economic analysis of the direct impact of alternative organizational arrangements on resource allocation by special districts. The paper extends the analysis first undertaken by Wagner and Weber (1975) of the differences in the fiscal effects of multipurpose versus single purpose local governments. The hypotheses in this paper are deduced directly from the monopoly model of local government supply introduced by Wagner and Weber and applied to special districts operating under two alternate governmental arrangements. Specifically, the model predicts that the expenditures of special districts will differ depending on whether they are organized as self-governing, independent governmental units or as subordinate units of a larger, general purpose unit, such as a city or county. Section 2 examines some of the advantages and disadvantages that have been claimed for single purpose special districts and develops the basic hypothesis. Section 3 tests the hypothesis using data from two types of California special districts fire protection and recreation and parks -