Citizen preferences and the architecture of government

We consider the division of a territory into administrative jurisdictions responsible for providing a set of goods to its residents. We deduce the optimal architecture of public governance (i.e. the division of government into several levels, the distribution of services among them, their number of jurisdictions and the capacity of their administrations), which depends on citizens preferences regarding the quality of public services. We compare it to a decentralized government where each jurisdiction is free to choose the capacity and scope of its administration. The resulting architecture generally involves more countries with fewer levels of administration than the optimal one. Our results allow us to estimate citizen preferences for the U.S. We find that the country is divided into two zones (“Northeast and West” and “Midwest and South”) whose estimated values are statistically different.