Political fragmentation has been conceptualized as a phenomenon which increases competition for mobile citizens and jobs between local governments within the same region. However, the empirical basis for this nexus between governmental fragmentation and increased competition for development is surprisingly lacking. Utilizing a newly constructed database that matches political fragmentation indices (horizontal, vertical, and bordered) to a nationwide survey of economic development officials in 2014, we begin to fill this gap by analyzing the influence fragmentation has on the use of tax incentives, regulatory flexibility, and community development tools in U.S. cities. Applying the political market framework and a Bayesian inferential approach, we find that the proliferation of local governments increases incentive use. However, more specialized governance increases the probability of using community development activities.
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