Abstract
Two types of competition exist between local governments. Horizontal (or inter-jurisdictional) competition occurs between governments of comparable power, whereas vertical (or intergovernmental) competition develops between governments with distinctive powers. Under this definition, competition between cities is horizontal, while competition between cities and counties is vertical. Although horizontal competition is widely recognized and studied, vertical competition has remained largely unexplored by scholars. This article examines the nature of vertical competition by analyzing the practice of active and passive matching behaviors of cities and counties in developmental and redistributive policies. More specifically, a set of cases in which cities and counties show active or passive matching behavior is presented. Then the developmental and redistributive expenditures of cities are regressed on the developmental and redistributive expenditures of countries and vice versa in a series of simultaneous equations. The results of these case and aggregate analyses suggest that vertical competition between cities and counties exists, particularly in developmental policy. The article ends with a discussion of various strategies to mitigate excessive vertical competition in developmental policy.