Do political motivations and strategic considerations influence municipal annexation patterns?

We provide the first parcel-level, time-series empirical analysis of municipal annexation behavior. We also exploit a unique natural experiment created by the incorporation and exogenous (court-mandated) dissolution of a new neighboring municipality to examine the public-choice motivations behind annexation. Our results indicate that an existing city’s annexation behavior differed significantly in the areas threatened with the formation of a competing jurisdiction, yielding the most compelling evidence yet that political motivations play a major role in the annexation behavior of cities. We also are the first to construct and include measures reflecting the strategic stepwise dependence between parcels in the annexation process—in terms of what other parcels subsequently can be annexed. We find that the characteristics of a parcel itself in many cases are of only secondary importance relative to considerations regarding the other parcels to which it gives access for future annexation. Such a spatially dependent stepwise factor has been overlooked entirely in prior literature assuming that parcel annexation decisions are independent of one another.