Intermunicipal Cooperation in the Netherlands: The Costs and the Effectiveness of Polycentric Regional Governance

This article examines the effects of the structure of intermunicipal cooperatives (IMCs) on the perceived transaction costs and benefits of IMCs. Hypotheses based on a polycentric theory of regional governance are tested using data from Dutch municipalities. The findings are mixed. In line with polycentric theory, networks characterized by a multiplicity of territorial scales reduce IMC transaction costs. Contrary to polycentric theory, however, if IMCs are organized under a uniform legal regime, lower costs and higher benefits are reported. Structural factors that dominate the debate between polycentrism and monocentrism prove to be of limited importance. On the other hand, the results indicate support for the hypotheses that intermunicipal trust (as a cultural variable) contributes to perceptions of effective and efficient cooperation. Evidence for Practice An undiscriminating reduction of network complexity (by imposing a fixed or limited set of cooperative partners) does not improve the functional performance of regional governance. Variety in cooperative partners appears to reduce the costs of cooperation but does not result in higher benefits. A consistent uniform regulatory regime that creates a set of rules on how to organize decision making and representation in intermunicipal cooperation increases functional performance of cooperation. Structural factors indicating how cooperation is organized play a minor role in explaining functional performance or cooperation. The cooperative climate (indicated by the level of trust) plays a more important role. Trust comes with lower levels of costs and higher levels of regional benefits but does not influence local benefits for individual municipalities.