Effects of Service Characteristics on Interlocal Cooperation in U.S. Cities: A Pooled Regression Analysis

Drawing on the theoretical framework of transaction cost theory and social exchange theory, this study empirically examines factors affecting the likelihood and the level of interlocal expenditure for 11 service types in a panel of 695 American cities, with populations over 20,000, during the time period of 1990–2000. The findings indicate that elements of transaction costs risks (asset specificity and measurement difficulty) affect both the likelihood and the level of interlocal cooperation. It also shows that the level of trust does the same. However, it suggests that the perceived transaction risks may vary depending on factors affecting local managers' perception of transaction risks. This will further affect the likelihood and the level of interlocal cooperation.