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The purpose of this paper is to discuss the municipal reaction to a recent rescaling policy in Italy that, since 2010, require to small municipalities to jointly manage their basic tasks (compulsory joint management – CJM) through intermunicipal forms of cooperation. The paper will investigate: how many small municipalities did effectively join their basic tasks; which forms of cooperation did they choose to perform these tasks; and which kind of reaction municipalities enacted toward the national provision.

Quantitative data rely on an original database collecting information on all Italian municipalities up to 2015. A qualitative research has also been conducted by submitting a semi-structured questionnaire and interviews to the civil servants in charge of the CJM in each of the 20 Italian regions and to other privileged interlocutors.

Italian municipalities poorly complied with the CJM norm and when they did, they choose the easiest way to do it (using the simplest available intermunicipal cooperation form). Among the explanations for this reaction: the lack of consistency and clear political will of the national policy maker in respect to this norm and the lack of a mind set at the local level oriented to cooperation and networking.

This paper highlights the main patterns of conflict in functional rescaling of small-sized municipalities in Italy, thus providing both fresh new data on this phenomena and useful elements for shaping future policy making on this topic.

Inter-municipal cooperation (IMC) has been increasingly adopted worldwide to tackle issues of size and cost reduction in the provision of public services. Although the determinants of cooperation among municipalities have been widely investigated in the prior literature, little is known about the link between a municipality's financial health and that of the supra-municipal entity formed under IMC. The purpose of this study is to fill this research gap by analyzing the case of municipal unions (MUs) in Italy.

A quantitative approach has been used, applying OLS and quantile regression on financial information and other variables of municipalities and their MUs.

The study finds that the most important condition of operation for IMC, that is, financial sustainability, is directly linked to the financial health of member municipalities and the functional integration reached with the supra-municipal entity.

The study analyses all MUs in Italy, focusing on the factors affecting their financial sustainability. In doing so, it sheds light on the factors that influence the financial sustainability of second-tier governments, which rely on external funding.