The efficiency of local public goods provision and
the functioning of local democracy crucially depend on the size and
number of local jurisdictions. This article empirically analyzes
voluntary municipal mergers in Finland. Our main focus is on aspects
that have been somewhat neglected in prior empirical work: whether local
democracy considerations, representation and voter preferences are
involved in shaping the resulting municipal structure. The main results
imply that some municipalities are forced to merge due to fiscal
pressure and have to trade off political power to be accepted by their
partners. The study also finds that the median voter's distance from
services matters, while population size does not. The latter, somewhat
surprising, observation is possibly explained by existing municipal
co-operation, which already exhausts potential economies of scale.