Transaction costs imposed on businesses and households by municipal hyper-fragmentation. Early evidences from the tax incentives for building renovation

Pressed by the European institutions and many international organizations, a growing attention has been drawn to the economic impacts associated with the quality of both the institutional and regulatory frameworks.

Traditionally, this type of analysis has been carried out on the economic sectors, whereas the present paper intends to investigate the effects of intense regulatory diversification in generally homogeneous areas, where the hyper-fragmentation of local government is more evident. At this institutional level, one of the most relevant issue is definitely spatial planning, for which local authorities enjoy substantial powers.

In the study, that furthers the studies in the IRPET research area on the quality of the local institutional framework, mention is made of evidence emerged from the case of Tuscany, and an estimate is presented of the effect of municipal fragmentation on the building renovation works eligible for favourable tax treatment by the central government.