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<p>Centralization of public goods with spillovers limits free-riding and increases provision, but general equilibrium responses to changes across space can undermine its value. This paper considers this trade-off for community colleges. In Texas, the amount of centralization has increased over time as school districts voted to join their local college’s tax base and coalition to provide these services. School districts that joined, as well the original tax base, saw higher aggregate property values after these geographic expansions, suggesting more centralization is beneficial. I then estimate a general equilibrium model to understand the optimal amount of centralization in the Austin MSA. Pure centralization, where all school districts join the coalition, increases average yearly household welfare by $29 ($23&#xa0;M overall) but is not optimal because household sorting responses adversely affect the housing market. There are 11,065 feasible intermediate amounts of centralization, that include only some school districts, that raise welfare by more.</p>

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Costly centralization: evidence from community college expansions

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  • 发表日期：

    2025年8月27日

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  • Andrew Simon

摘要

Centralization of public goods with spillovers limits free-riding and increases provision, but general equilibrium responses to changes across space can undermine its value. This paper considers this trade-off for community colleges. In Texas, the amount of centralization has increased over time as school districts voted to join their local college’s tax base and coalition to provide these services. School districts that joined, as well the original tax base, saw higher aggregate property values after these geographic expansions, suggesting more centralization is beneficial. I then estimate a general equilibrium model to understand the optimal amount of centralization in the Austin MSA. Pure centralization, where all school districts join the coalition, increases average yearly household welfare by $29 ($23 M overall) but is not optimal because household sorting responses adversely affect the housing market. There are 11,065 feasible intermediate amounts of centralization, that include only some school districts, that raise welfare by more.