Intergovernmental cooperation and joint purchasing agreements: Do governments free‐ride?

Abstract

AbstractPublic management scholars argue that collective action problems (e.g., incentives to free‐ride on the efforts of others or shirk agreements) threaten the feasibility of intergovernmental cooperation. Drawing on collective action theory, this article examines factors associated with overcoming free‐riding incentives and provides evidence challenging the idea that governments are prone to such strategic behavior. The empirical analysis of a national Danish purchasing group demonstrates how coercion is not necessary to induce subnational governments to incur private costs to join the group and, despite opportunity and incentive to free‐ride, contribute to its production of joint purchasing agreements—collective goods whose quality depends on the staff resources and expertise the participating governments contribute to their production. Further, multivariate analyses find that governments are more likely to help produce these collective goods when they receive more of their benefits, face lower contribution costs, and receive stronger social norm pressures from peers.