Testing for Strategic Interaction Among Local Governments: The Case of Growth Controls

This paper helps to fill a gap in the public economics literature by providing empirical evidence on strategic interaction among local governments. Using the methodology of Case et al. (Journal of Public Economics,52, 285–307 (1993)), the paper focuses on the adoption of growth-control measures by cities in California and looks for evidence of policy interdependence in these choices. The data are drawn from an elaborate survey of growth control practices in California cities, conducted by Glickfeld and Levine (“Regional Growth . . .Local Reaction,” Lincoln Institute of Land Policy, Cambridge, MA, 1992). The survey results are used to compute an index of the stringency of growth controls in each city, which serves as the dependent variable for the study.