Municipal co-financing - voluntary extortion?

University essay from Lunds universitet/Nationalekonomiska institutionen

Abstract: This thesis investigates the rationales of municipal co-financing. The introduction of passenger trains on the Söderås Line is used as a case study to investigate this concept. The empirical analysis is primarily based on 10 in-depth interviews – with decision makers, politicians and officials. Focus lies on Svalöv Municipality, who is co-financing the introduction of passenger trains on the Söderås Line (together with the other municipalities, the Region of Scania and the Swedish Transport Administration). Additionally, a questionnaire has been sent to Sweden’s 290 municipal mayors to examine if the patterns emerging from the in-depth interviews can be generalized. It is concluded that municipal co-financing primarily is a way to distribute costs between the different agents who sign the agreement of co-financing. At the same time a large degree of information asymmetry is present. The Swedish Transport Administration is providing the calculations and the projections. Additionally, municipal co-financing is becoming increasingly common. In the case of the introduction of passenger trains on the Söderås Line, Municipal co-financing was required – as the project would otherwise not have been conducted.

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