Inter-municipal cooperation (IMC) is a generic term for all joint provision of public services between municipalities, who are normally but not necessarily neighbours.
[1] One speaks of IMC when two or more municipalities work together to provide a public service, where cooperation ranges from coordinated behaviour to joint ventures.
[2][3] However, IMC can have high failure rates when coordination problems between municipalities in steering and monitoring cannot be resolved.
[4][5][6] Unfortunately, coordination can be hard to achieve due to the multiple principal problem that exists in inter-municipal cooperation.
A historic example of inter-municipal cooperation is the Hanseatic League,[8] created by municipalities in Northern Europe and lasted from the 13th to the 17th century.
While cooperation was initially without obligation, with the beginning of the 20th century IMC was increasingly legally codified.
[3] The joint financing and operating of these services can cut costs and achieve economies of scale and scope, which becomes increasingly important in smaller and more rural municipalities.
A major advantage in Europe is that the European Union is providing incentives for municipal partnerships.
The most important barrier for inter-municipal cooperation is lack of trust or coordination between the partners, and if these cannot be overcome, failure rates of IMC can be high.
As these units need clear defined rights and obligation the effort to form them is much higher, and they are not possible in all countries.
However, while research shows such cooperation can be effective and efficient, the complexity of contracts in such arrangements can also lead to high failure rates.
After the successful implementation of the project, the parties should negotiate certain progress of improvement an adjustment to changing environmental conditions.
[1] Especially in the thinly populated Finland inter-municipal cooperation has been an effective tool to ensure public services at reasonable cost.
[1] France was essentially governed by a central state, but within the last century municipal authorities have gained increasing autonomy.
As discussion of other larger-scale, regional, consolidation is politically hazardous in France, IMC (intercommunalité) is becoming an important factor to help maintain public services at reasonable cost.
[13] Although municipalities have the authority to perform public services they often do not have the possibility to raise additional fees.