Analysing Municipalities Amalgamation and Collaboration through the Principle of Fiscal Equivalence and the Principal-Agent Model (Fusions et rapprochements de communes à la lumière du principe d'équivalence et de la théorie de l'agence)

In recent times, Swiss federalism has undergone important changes. Definitely, one of these transformations is the implementation of a territorial reshaping at the local level through municipalities amalgamation or collaboration. Considering this evolution, the aim of our paper is twofold.The first objective is to analyse whether financial incentives to amalgamation granted by cantonal governments benefit rather to the whole cantonal community than to the only amalgamating municipalities. Through an analysis of laws and other texts produced by cantonal governments, we show that arguments invoked by cantonal executives to justify the implemented financial policy aim primarily at municipalities directly concerned by amalgamations rather than at the whole cantonal community. Consequently, the analysed financial incentive policies do not or poorly respect - in their argumentation - the principle of fiscal equivalence between the payer - cantonal taxpayers - and the recipients - the whole cantonal community.The second objective of this paper is to analyse whether we observe a coincidence between citizens' expectations and the government's motivation pertaining to an amalgamation project. In this case, the agent - government elect - would take principal's - population - preferences into account. Using data collected during a project in which we were involved, we show that in fact a discrepancy between population's expectations and the government's goals regarding an amalgamation project may arise. Such a situation, in the Swiss direct democracy framework, increases the risk of failure at the polls, which would result in a significant waste of time and resources for the community