The Determinants of State’s Decision to Join

the Interstate Compacts

주정부간 협약 참여를 결정하는 요인 분석

｢지방정부연구｣ 제13권 제1호(2009 봄) : 217～237

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Kim, Bok-Tae

Interstate compacts hold tremendous promise for resolving tough public problems at the sub national level. They have also been promoted as one way that states can protect their sovereignty vis-à-vis the national government. But the rate at which states participate in such compacts varies widely. Thus, this study asks: What explains a state’s propensity to join interstate compacts? Building on the IAD framework, the outcome(interstate compact participation) is hypothesized through physical/economic conditions, community attributes, and the institutional arrangements affecting the values of the variables characterizing interstate compact action arena. Using negative binomial general estimating equations(GEE) with time series cross-section data of 48 states from 1961 to 1990, this study finds that federal involvement decreases the degree of interstate compacts. This study also finds that state bureaucratic capacity increases preferences for joining compacts. This study also finds that state political structure influences horizontal cooperation. Empirical results suggest that when the upper-level government tries to deal with the externalities within the lower level government, its involvement in the lower level government may exhaust the opportunities for voluntary cooperation.

Key Words : Interstate Compacts, IAD Framework, Federal Involvement

Ⅰ. Introduction

Harmonious interstate relations in general are a central feature of successful federal systems that have constitutions allocating substantial powers to member states. Conflicts, however, arise in these systems and can be resolved by means of interstate cooperation(Nice, 1987; Walker, 2000; Zimmerman, 2002). The emphasis on interstate cooperation should not blind us to interstate conflicts over water allocation, pollution, boundary lines, taxation, and other subjects. When state officials seek to resolve wicked policy problems with severe conflicts, the decision-making task is sometimes complicated by issues that do not respond to interjurisdictional problems. Thus, state governments are unable to deal with spillover problems that result when the policy choices in one state impose costs(or benefits) on others. Negative or positive externalities may occur when a problem involves two or more states. Those externalities may produce some justifications for the involvement of the federal government in decision-making because state officials tend to ignore the effects which their programs may have on other states(Break, 1980). But within the American federal system, cooperative interactions between the states have encompassed a variety of mechanisms: informal cooperation, voluntary associations, operational enactment of similar laws, and differing degrees of formal legal accords, including interstate compacts and administrative agreements. The most binding of these instruments is the interstate compact, a legal document that combines the attributes of a state statute and a contract(Florestano, 1994; Zimmerman, 2005).

The Determinants of State’s Decision to Join the Interstate Compacts

｢지방정부연구｣ 제13권 제1호(2009 봄)

Cooperative action among states is significant for a number of reasons. First, many problems facing society do not ﬁt neatly within the boundaries of a single state. As a result, an action by an individual state may not be the appropriate method for dealing with a certain problem. Second, an action by one state may generate negative or positive externalities, and some of the costs or benefits of that action may transfer to other states. The failure of individual states to consider those externalities may in turn distort horizontal interstate relations. Third, cooperative action by the states may enable them to cope with the above-mentioned problems without resorting to action by the Congress or the U.S. Supreme Court(see Zimmerman, 2002: 204-217). To improve the functioning of the federal system there is a fully recognized the need for inclusion of provisions to establish a framework for multifaceted interactions between states in the new governance systems they were crafting(Walker, 2000; Cho and Wright, 2001). However, previous interstate compact research provided few accounts of the conditions within which interstate cooperation might emerge. Collecting empirical information on interstate cooperation was a major task because of the relative lack of current empirical-based information.

This research concentrates on two limitations in the literature on interstate compacts. First is the common assumption that the action situation within a state is the only factor in interstate cooperation(Florestano, 1994; Kearney and Stucker, 1985; Bennett, Howe, and Shope, 2000). Instead, this study takes into account the politics of interstate relations and federal involvement as a major factor to interstate cooperation. Second, there is little study, if any, on the dynamics of interstate compacts. Furthermore, because short time periods or cross sectional data are prevalent in the literature, these cannot capture the dynamics of interstate cooperation. This study uses a time series cross-section data set of 48 states from 1961 to 1990. This new data set is considerably larger and more detailed than any used in previous studies. To structure empirical inquiry, this study relies on the Institutional Analysis and Development(IAD) framework.

In the next section, the history, process, and uses of interstate compacts generally are discussed. Then the IAD framework is briefly described and several hypotheses are outlined. In the fourth section, these hypotheses are tested using a negative binomial general estimating equation regression. The results provide strong support for the hypotheses. Finally, the results of the model are discussed with suggestions for areas of future research.

Ⅱ. Interstate Compacts

Interstate compacts are traditional mechanisms for cooperation among states. Basically, the compact is a legal agreement between two or more states entered into in order to deal with a problem or concern that crosses state boundaries. Because of its contractual nature, once approved by the participating states, compacts are legally binding, that is, they take precedence over conflicting state laws. Because a compact is also a contract between the participating states, it differs from other statutes. As a contract, an interstate compact is binding on member states in the same manner as any other contract entered into by an individual or corporation. Once entered into, compacts cannot be unilaterally amended or repealed. If a state violates or fails to honor the terms of a compact, an offended state or states may sue in state or federal court.

Interstate compacts have a history of more than 200 years in American intergovernmental relations. According to legal historians, the interstate compact was a useful device among British North American colonies prior to the American Revolution. Although compacts can be used for almost any activity, they were used primarily for boundary disputes in colonial times, and they were subject to subsequent approval by the British Crown. The Articles of Confederation recognized the need for a means to settle various disputes, while at the same time protecting the new union from “the destructive combination of two or more states”(Frankfurter and Landis, 1925: 687). Thus, the Articles authorized the use of compacts, but with the consent of the Congress. The constitutional requirement for the consent of Congress has been one of the most complex aspects of compacting. In 1962, the U.S. Court of Appeals ruled that interstate compacts of a political nature are not effective unless approved by Congress, but states can enter into nonpolitical compacts without congressional consent.  Usually, those that affect the political balance within the federal system or affect a power delegated to the federal government require congressional approval. Compacts that do not require congressional consent are those which establish channels of interstate relations, seek uniformity of law, or pertain to issues where state action is usual and predominant, such as education, child welfare, criminal law, or mental health.

Tobin v. United States, 306 F.2d 270 at 272‐274, D.C. Cir. (1962).

Interstate compacts allow a set of states to pursue a common agenda or handle a problem that affects them jointly(Voit and Nitting, 1999). Other than boundary compacts, which resolve bilateral disputes over territory, compacts increasingly have administrative, financial, substantive, and technical dimensions(Zimmerman, 1996). Until 1920, on an average, one compact was adopted approximately every four years in the whole country. Most of the compacts were bilateral, and most dealt with boundary disputes. The rate of adoption accelerated to more than four compacts a year during the 1960s, but has declined somewhat since 1987(Nice, 1987). In addition, the scope of involvement has increased; many compacts are now regional or even nationwide in coverage.

According to the council of state governments, as of 1993, 195 interstate compacts are currently in effect between and among the several states, each covering various functions such as environmental protection, transportation regulation, provision of services for criminal justice activities, and the traditional areas of boundary resolution to regulate rivers and river resources. However, 24 of them had been ratified by only one state and were not in effect(Voit, Vickers, and Grevenonis, 2003). Of the 169 interstate compacts in effect in 1993, 56 were bilateral, such as the Mississippi-Louisiana Rapid Rail Transit Compact. Others were regional, such as the Interstate Liberty Compact, the Interstate Corrections Compact, the Compact on the Placement of Children, and the like.

Among the states, compacting initiatives arose from a variety of sources, including formal and informal contacts between governors and other executive branch officials, legislators, governmental associations like the Council of State Governments, and professional organizations. For instance, the Sothern Regional Education Compact was initiated by Southern governors. The Multi-state Tax Compact emerged from a meeting of the National Association of Tax Administrators, with drafting aid furnished by the Council of State Governments and various state officials(Sharpe, 1975).

Ⅲ. Theoretical Framework and Hypotheses

The focal point of the IAD framework is the action arena in which individuals choose actions or strategies. The action arena contains action situations and actors. Action situations refer to the social space where individuals interact, exchange goods and services, engage in appropriation and provision activities, solve problems, or fight(Ostrom, 1999, 2005). The actor in action situations can be viewed as a single individual and as a group. Actors are the individuals or groups within an action arena who interact and have preferences. Action situations determine the immediate cooperation structure which in turn influences the relationships between actors. Three sets of contextual variables belong to the action arena: (1) physical/material attributes; (2) attributes of community; and (3) the set of institutional arrangement. What is distinctive about the IAD framework is that all situations are viewed as being composed of the same set of elements. In the three sets of exogenous constraints, actors within the action arena exhibit strategic behavior based on perceived costs and benefits including the time and resources devoted to establishing and maintaining interactions.

Ostrom(1999: 65-70) held that the relative importance of the rule-in-use, attribute of community, and the physical world in structuring an action arena varies dramatically across different types of action situations. Interstate compacts involve struggles by political actors and their political representatives over the content and form of interstate cooperation. Preference in political and professional groups is affected by vertical institutional rules or policy designs. This study pays considerable attention to how institutional arrangements(structure of rules) affect decision-making within action arena in which collective action takes place.

1. State Physical and Economic Capacity

The physical/economic capacity of a state refers to the physical/economic conditions of a compact arena that is involved in the action situation. The physical/economic conditions strongly affect the available options since actors’ strategic actions depend on the various constraints that they place. Previous research on state policy decisions has established that the physical and economic capacity of state decision-making has substantial influence on a wide variety of policy outcomes(Dye 1966 Morgan and Hirlinger 1989).

Affluence is a significant influence on many policy decisions(Hwang and Gray, 1991; Morgan and Hirlinger, 1989). State officials may want to provide a wide variety of public services, but they are constrained by what the state’s economy can support. Compact participation may help states provide more effective services for a given level of funding. Costs may be shared, and unnecessary duplication may be reduced or eliminated(Zimmerman, 2002). Moreover, states, like nations, may avoid inter-jurisdictional agreements if state officials feel that they have the ability to act alone. A wealthy state is more likely to be able to achieve policy goals with its own resources, other things being equal, and may therefore have a smaller incentive to join compacts. Less affluent states will join more interstate cooperation in order to share expenses.

State size may influence proclivities to join interstate compacts. Individual states with a greater stake in the outcome may have a greater incentive to participate. Individuals with a smaller stake and whose participation is less noticeable may become free riders, doing nothing while individuals with a greater stake do the work(Olsen, 1965: 27-45). In this view, larger states should be more likely to join interstate compacts. With larger populations, they will have more people likely to benefit, and their greater size may make their participation more noticeable to others.

By the same token, consider the capacity of a state’s bureaucratic capacity on their propensity to enter into compacts(Zimmerman, 1996, 2005). A state’s participation in a compact can introduce additional administrative responsibilities(Zimmerman, 2002). In particular, states with limited bureaucratic capacity might not be able to meet the obligations of a compact and, therefore, will be less likely to join. Furthermore, bureaucrats can function as policy entrepreneurs, informing elected policymakers of the benefits of compact participation. On the other hand, a larger bureaucracy gives a state the administrative resources necessary to implement a compact. Thus, states with greater administrative capacity are more likely to participate in interstate compacts. These explanations generate the following hypotheses:

Hypothesis 1a: The size of the state is positively related to the degree of interstate compacts that a state signs.

Hypothesis 1b: The wealth of the state is negatively related to the degree of interstate compacts that a state signs.

Hypothesis 1c: The bureaucratic capacity of the state is positively related to the degree of interstate compacts that a state signs.

2. Characteristics of Community

As an attribute of community indicators, it is an orientation to a certain policy that people in a jurisdiction share. Social and political characteristics of state population shape preferences for public goods and help determine the potential gains and costs of cooperation. In an interstate compact perspective, it is the shared interest of people to have governments participate in a certain formal or informal agreement. Homogeneity of preferences is salient. It is expected that homogeneity in a state signals potential common interests and public service preferences. In the interstate compact arena, therefore, a state’s citizen ideology may influence its willingness to cooperate with other states. Citizen ideology also reflects the potential impact of public opinion on interstate cooperation(Barton, 1967; Graves, 1934; Leach et al., 1969). Conservative ideology includes a resistance to change, a reverence for tradition, and a rejection of the use of government to improve the human condition. By contrast, liberals tend to be more supportive of change and more willing to use governmental power to attack social ills. Given that liberals are generally more willing to use government power to attack social problem, this perspective indicates that citizen’s liberal ideology should lead to more interstate cooperations.

Demographic homogeneity suggests that there will be not be political and economic power asymmetries that advantages one of the parties and create problems for negotiating fair divisions of benefits. Mancur Olson(1965) argues that collective action occurs when people overcome obstacles to collective action to organize their interest in a coherent group. Olson(1965: 125-131) insists that groups that are more homogeneous in social attributes are easier to address collectively to organize their interest in one direction because transaction costs and information costs are minimized(Taylor, 1982). Heterogeneity of preferences raises bargaining costs, since diverse populations are difficult to organize for collective action(Hackett, 1992; Libecap, 1989). Furthermore, population homogeneity reduces agency costs for officials negotiating interstate agreements on behalf of citizens.

One of the most important characteristics of community is geographic location. Neighbors have incentives to cooperate based in the technical costs of sharing services. For services with higher costs, it might be expected that agreement will be sought with the same neighbor across different services. Fixed geographic borders also require repeat play among neighboring states, and thus reduce transaction costs by creating interdependence(Miller, 1992). The prospect of future play with the same party constraints opportunism so it is then in the interest of each state government to cooperate with neighbors who cooperate(Colman, 1988). In “Governing the Commons,” Ostrom(1990) provides many cases of cooperative norms generated through repeated community interaction. As suggested by policy diffusion(e.g., Berry and Berry, 1990), the existence of interstate compacts in neighboring states may provide models that reduce the costs of joining interstate compacts. In addition, state officials often look to neighboring states for policy cues, in part because they believe their neighbors have similar problems and resources. If the neighboring states are generally cooperative, that may create a more favorable climate for cooperation. Another interpretation of neighboring states is that interdependence within the states may create a sense of shared fate or shared interests and, consequently, foster cooperation. As a result, greater interdependence should foster more interstate cooperation. Prior research has found that regional partners do in fact tend to be in compacts together(Welch and Clark, 1973). These explanations suggest the following hypotheses:

Hypothesis 2a:	States that are more liberal are more likely to join interstate compacts.

Hypothesis 2b:	An increase in percent of African-American within a state will result in a lower number of interstate compacts that a state signs.

Hypothesis 2c:	The number of neighboring states sharing a border which sign any interstate compact is positively related to the number of compacts that a state signs.

3. Institutional Arrangements

Institutional arrangements are the third cluster of variables constituting the decision situation. Institutional arrangements refer to the institutional contexts in which interstate compact decisions are made, which are generally a function of the institutional structure of state government (Ostrom, 1986, 2005). Institutional arrangements are rules that “are potentially linguistic entities that refer to prescriptions commonly known and used by a set of participants to order repetitive, interdependency relationships”(Ostrom, 1986: 22). In a rule-structured situation, participants choose specific actions based on a set of allowable actions in point of view incentives. Rules as social artifacts are designed by human intervention. By changing rules, it is possible to alter the structure of incentives facing individuals and the way in which they relate to one another. The formation and change of public policies are accommodated by a function of three primary factors: the distribution of preferences(interest) among political actors, the distribution of resources (powers), and the constraints imposed by the rule of game(constitutions)(March and Olsen, 1984: 739).

Political institutions are linked to interstate cooperation because they shape the information available and the structure of incentives faced by state government officials. Administrators and elected officials each play a role in forging cooperative alliance with other state governments but they differ in their bargaining resources and institutional positions. Interstate compacts offer incentives for efficiency, but may also motivate the parties to act opportunistically(Zimmerman, 2002). The central theme of the political institutional approach is that institutions provide the strategic context in which political actors make policy choices. It suggests that institutional contexts frame political actors’ policy choices(Miller, 2000). Therefore, the electoral politics may influence interstate cooperation. Godwin and Shepard(1976: 1127-1135) have hypothesized that interparty competition may lead to greater responsiveness to public demands. Higher levels of electoral participation may also produce greater sensitivity to public concern(Verba and Nie, 1972). Of course, public demands may not always encourage interstate cooperation, but almost all citizens would probably support obtaining more effective services per dollar and avoiding losses or the inconvenience from interstate variation in laws. In general the prior research indicates that states with a high level of interparty competition tend to be more likely to join all the compacts(Nice, 1987).

The political incentives for state leaders have implications on their willingness to enter into cooperative arrangements. Although elected officials are expected to be primarily responsive to internal electoral constituencies, motivations unrelated to efficiency may create demands for collaboration. If governors are interested in election or nationwide office in the future, or desire to advance within their political party, they might promote regional interests to enhance their recognition and reputation outside their states. Gillette(2000: 195) asserts that electoral ambitions can lead local officials to address interstate needs even in the face of weak internal demand. Governors seem to be major initiators of interstate compacts(Schlesinger, 1966: 200). In addition, some observers contend that support for cooperative effort is generally stronger in the executive branch than in other branches(Fite, 1932: 131). Prewitt and Nowlin(1966) and subsequent research have continued to focus on the policy preferences and attitude of ambitious incumbents, not their behavior in office. The theoretical linkage to gubernatorial behavior and interstate compact participation could be more strongly made as a political opportunity cost issue. If governors are busy running for election, they might pay less attention to issues that have weak internal demand. If this is the case, when governors devote little time to interstate cooperation, as is the case when it is the gubernatorial election year, inaction is likely to be the order of the day. Consequently, efforts to move greater cooperation forward may be hampered.

Interstate compacts are embedded in the American federation system as a cooperative device. Participation in interstate compacts may reflect federal-level involvement. The national government casts a large shadow over the states and has a marked influence on state policy choices(Allen, Pettus, and Haider-Markel 2004). During the twentieth century, congressional acts and rulings of the United States Supreme Court had the effect of shifting power in our federal system toward the national government(Zimmerman 2005). In terms of federal-level intergovernmental involvement, there are two kinds: cooperation and coercion(Cho and Wright, 2001). Within those involvements, federal activity has a significant impact on vertical intergovernmental relations. National government activism gives the states incentives, stimuli, or carrots. Activism was initially a form of gentle and sometimes not-so-gentle persuasion. It encourages states in a variety of ways. States may be induced to enter new ﬁelds of activity, expand programs or policies, or shift priorities from one activity or program to another. For example, when federal government offered incentives to states to adopt certain policies, those polices diffused faster than policies with no incentives attached(Welch and Thompson, 1980; Allen et al., 2004). Vincent V. Thursby(1953: 3) reviewed compacts as a valued instrument of interstate cooperation, “one of the devices by which we resist the extremes of centralization.”When the national government expands, filling up policy space, the role for states may be diminished. At these times, centralization may have a substitute effect, such that as national influence increases, the need for state compacts decreases(Bowman and Krause, 2003). From this reasoning, it is plausible to say that federal government’s involvement in state policy has a negative impact on the interstate cooperation. These explanations generate the following hypotheses:

Hypothesis 3a:	States with a high level of interparty competition are more likely to join interstate compacts.

Hypothesis 3b:	The gubernatorial election year is negatively related to the number of interstate compacts that a state signs.

Hypothesis 3c:	An increase in federal involvement is negatively associated with the number of interstate compacts that a state sings.

Ⅳ. Methods and Data

The hypotheses have been tested using event count analysis. The central concept in event count analysis is the number of times that an event has occurred during an interval of time. In this study, the units of analysis are 48 continental states, the time periods are the calendar years between 1961 and 1990, the event in question is the participation in interstate compacts. The probability that the number of events(Yt) occurring in the interval of time is equal to some value yi ∈ {0, 1, 2, . . .} is P r(Yt = yi) = f (xiß) where f (.) is the distribution function and xiß in this particular case is speciﬁed as:

Compactsi,t = ß0 + ß1LnPopulationi,t + ß2Incomei,t + ß3BureaucraticCapacityi,t +

ß4CitizenIdeologyi,t + ß5BlackRatei,t + ß6NeighborStatesi,t + ß7InterPartyCompetitioni,t +

ß8ElectionYeari,t + ß9FederalActivismi,t + ß10Compactsi,t-1 + ei,t (1)

The underlying dependent variable, Compactsi,t is the number of interstate compacts in which a state(i) participates in a given year(t). <Table 1> shows the number of interstate compacts that a state signs in the analysis. The observed dependent variable ranges from a low of zero to a high of 5, with a mean of 0.46 and a standard deviation of 0.80. Interstate compact data are assembled from state codes and the Council of State Government reports and articles. The independent variables, to be deﬁned below, are the factors discussed in the text that are hypothesized to inﬂuence the number of interstate compacts that a state signs.

<Table 1> Number of Interstate Compacts per Sate-Year, 1961~1990

Number	0	1	2	3	4	5	Total
Frequency	985	310	97	38	6	4	1,440
Percent	68.40	21.53	6.74	2.64	0.42	0.28	100.00

In the equation, the subscript i and t denote the state and year of observation, respectively. LnPopulationi,t is measured by the natural log of state population in 1000s. The log of the population is used because the effect of an increase in population should become smaller as the population becomes larger. Incomei,t represents personal income, as measured by real per capita income in thousands of dollars(1980=100), in state i in year t. BureaucraticCapacityi,t is measured by the number of state and local government employees per 1,000 population. BlackRatei,t represents the percentage of the black population. Data for these variables come from the U.S. Census Bureau. CitizenIdeologyi,t denotes the state citizen ideology on a scale ranging from zero(conservative) to one(liberal), as measured by Berry et al.(1998). NeighborStatesi,t, the term reflecting regional influence, denotes the number of neighboring states, that is, the number of states shared a border with state(i) which signed any interstate compact in a given year(t).

InterPartyCompetitioni,t denotes the interparty competition, a folded Ranny index(1965), on a scale ranging from .500 indicating perfect competition between the parties to 1.000 indicating no competition between the parties. ElectionYri,t is a dichotomous variable that equals 1 if it is the year of a gubernatorial election, zero otherwise. FederalActivismi,t is measured by an index of national government policy centralization developed by Bowman and Krause(2003). This index assesses the extent to which congressional enactments in a given year have the effect of shifting power toward the national government(centralization) or toward the states(decentralization). The study averaged these annual scores to create a policy centralization score for each decade. More substantive public laws with an intergovernmental focus affect all states equally, but some actions are aimed only at a particular subset(e.g., states in the Appalachian region). Therefore, in any given year, modest variation in individual states scores may occur on the centralization-decentralization index.

The specific formula for this computation is IP C = 1 – |RI - .5| where IP C is the interparty competition index and RI is the original Ranney index.

Finally, in order to take account of serial correlation within longitudinal data, this study includes a lagged dependent variable, Compactsi,t-1, which is measured by the number of interstate compacts that a state signed the previous year(t-1). It is now easy to say that the impact of both the explanatory variables and the omitted variables persists over time but at a geometrically declining rate. A reasonable interpretation is that the effect of interstate compact participation would continue to persist because when a state considers whether to sign any interstate compact it takes into account all possible compacts as a bundle. Therefore, once a compact was signed, other compacts could not be signed until new interstate compacts were introduced.

Several methodological issues had to be dealt with in calculating the statistical model shown in Equation 1. First, the dependent variable is event count. Since the underlying distribution of the data is a count, non-negative and non-integer values are impossible. Using the Poisson model may provide more unbiased and consistent estimates even in large samples(King, 1988). However, the Poisson regression model assumes that the conditional mean of the dependent variable equals the conditional variance. This assumption, which is often violated, causes underestimated standard errors and spurious statistical significance. Therefore, a negative binomial regression is applied, which allows the conditional variance of the dependent variable to exceed the conditional mean by adding a dispersion parameter(a) to model the unobserved heterogeneity among observations. In this analysis, the a parameter from Negative Binomial Regression Model(NBRM) can be used to test which model is preferable. Since the dispersion parameter(a) is positive and significant, there is evidence of overdispersion. A likelihood ratio test can then be computed which conﬁrms that there is overdispersion. In this case, the NBRM is the appropriate model to use.

Another consequence of overdispersion may be excess zeros. Based on a histogram of values for the dependent variable(see <Figure 1>), it is evident that the data is not normally distributed and that there are many zeros. The concern though is whether zeros are affecting the estimation of the NBRM. If so, then using a zero-inflated negative binomial regression model(ZINB) is more appropriate. A Vuong test which provides a test of which model is a better ﬁt for the data–the NBRM or the ZINB–favors the use of the NBRM. Substance and theory should also guide this choice as there is the possibility that a state could participate in any interstate compact in any given year. Little barrier to participation in any interstate compact and a variety of interstate compacts make it unlikely that any state’s participation in any interstate compact would always be 0.

A zero‐inﬂated model would be more appropriated here if we assumed that there were two types of zeros on a given year. One type of zero is no participation that occurred with probability one, and the other is a no participation that occurs with some probability less than one.

<Figure 1> Frequency Distribution of Interstate Compact Participation

The third methodological issue concerns the pooled time-series cross sectional(TSCS) arrangement of the data. Cox and Isham(1980) have persuasively shown that time dependence in the rate at which event occur, contagion effects, and heterogenity tend to be major sources of autocorrelation in time series count data. Because autocorrelation is prevalent in TSCS data, this study uses negative binominal generalized estimating equation(GEE) regression. Green, Kim, and Yoon(2001) raise a further concern about TSCS estimation. They argue that the unmodeled heterogenity that is often present in TSCSestimates produces biased errors and omitted variable bias. They propose fixed effects regression as a solution. Given the concern that Beck and Katz(2001) raise about fixed effects estimates of TSCS data, outcomes from the negative binominal GEE regression is presented.

Ⅴ. Empirical Results

This section discusses the empirical findings. <Table 2> presents the results from three models. The first column refers to results from the Poission model as a benchmark model. The second column presents results from the Negative Binomial Regression(NBRN) for potential overdispersion. In the NBRN, the test of the dispersion parameter indicates that the conditional variance of the dependent variable exceeds its conditional means at a statistically significant level. It justifies the use of the negative binomial model over the Poission regression. The Wald test of the model fit is statistically significant at the 1% level as well. The third column in Table reports results from the Negative Binomial GEE model which is designed to deal with autocorrelation and lack of homoskedasticity in pooled time-series cross-sectional data. The results across the three models are very similar. However, the primary interest is in the Negative Binomial GEE model. As a result, the inference is based on this model.

It includes both serial autocorrelation and spatial autocorrelation.

Next the variables in the Negative Binomial GEE model are studied. The statistical results in <Table 2> show the main factors that explain the probability of interstate compact participation. First, state compact decisions do appear to be responsive to the actions of vertical and horizontal governments at both the state and national levels. The federal activism variable is significant to interstate compact participation. For example, a 1% increase in federal activism decreases the expected number of a state’s compact participation by a factor , holding all other variables constant. Put another way, the incident rate of interstate compact participation leads to .82 times lower when federal activism increases by l%. When acts of congress shift power to the states, participation in interstate compacts increases, which implies that states employ interstate compacts as substitute for federal activism rather than as a defense against it. The Neighbor has a statistically significant impact on joining interstate compacts at 0.01 level. A one state increase in the number of its neighbors that participate in interstate compacts will increase the expected amount of interstate compact participation by a factor of , holding all other variables constant. The results provide evidence of the diffusion of interstate compact participation, possibly through a process of social learning (Mooney 2001; Berry and Berry 1999; Boehmke and Winter 2004).

Second, political institution can significantly influence interstate compact participation. As  interparty competition increases by one unit, the expected number of interstate compact participation incident will increase by a factor of , when all other variables are held constant. That means that states with more intense party competition tend to join more interstate compacts. The coefficient of gubernatorial election year has a negatively significant impact on joining interstate compacts at .01 level. In the gubernatorial election year, the expected amount of interstate compact participation will decrease by a factor of  , when all other variables are held constant. This result complies with the assumption that elected officials are more opportunistic than appointed officials and thus more likely to carryout self interest-types of policy changes. Furthermore, this finding indicates that a governor may have less active initiator role in joining interstate compacts when it comes to election year.

Third, demographic heterogeneity decreases the amount of interstate compact participation. A one unit increase in the percentage of the black population will decrease the expected number of interstate compact participation by a factor of , when all other variable are held constant. Forth, in terms of state physical/economic capacity, bureaucratic capacity is associated with higher rates of compact participation, indicating that greater capability to administer compact provisions leads to higher levels of interstate cooperation. A one-unit increase in bureaucratic capacity is estimated to lead to a one-percent increase in compact participation.

Fourth, contrary to expectations, smaller jurisdictions may have an incentives to cooperate in order to share costs even if the results is not statistically significant. The finding is not consistent with Mancur Olsen's argument that greater size brings a greater stake and therefore foster contributions to collective enterprise. The finding may bring back Weldon Barton's view(1967: 161) that smaller states, by pooling their resources and sharing the facility, might be able to provide a service which none could provide economically by itself.

Finally, one control variable also has a significant effect on state compact participation. Not surprisingly, fewer compacts are joined when more compacts were singed in previous year. As the number of interstate compact participation in the previous year increases by 1 point, it is expected that the number of interstate compact participation will decrease by 37.3%, when all other variables are held constant. This is a very substantial decrease. One explanation seems to hold: when a state is considering the participation in a specific interstate compact, it seems to consider other interstate compacts as a whole. once a state legislature ratifies the specific interstate compact, there is little room for participating in other compacts in the next year.

<Table 2> The Determinants of Interstate Compact Participation

Dependent Variables: The Number of Interstate Compact Participation
Regressor	Posisson Model	Negative Model	NB GEE AR(1)
Institutional Arrangement
Interparty Competition	-1.11** (.49)	-1.03*** (.49)	-1.13* (.59)
Gubernatorial Election Year	-.58** (.14)	-.62*** (.12)	-.51*** (.13)
Federal Activism	-.21*** (.07)	-.16*** (.05)	-.20*** (.06)
Characteristics of Community
Citizen Ideology	-.01 (.00)	-.01* (.00)	-.01 (.05)

Demographic Heterogeneity	-.04** (.02)	-.04** (.01)	-.03*** (.01)
Neighboring States	.16*** (.02)	.17*** (.03)	.16*** (.03)
Physical/Economic Capacity
Size	-.01 (.06)	-.01 (.05)	-.01 (.05)
Wealth	-.00 (.02)	-.01 (.02)	-.01 (.02)
Bureaucratic Capacity	.017*** (.005)	.017*** (.005)	.017*** (.005)
Lagged Number of Compacts	-.27*** (.08)	-.26*** (.08)	-.24*** (.07)
Constant	2.14* (1.18)	2.09* (1.19)	1.97** (.90)
a		.43*** (.11)
Observation	1392	1392	1392
Log likelihood	-1216.57	-1204.92
χ2 (9)	141.02	111.87	105.14

*p<.10, ** p<.05, *** p<.01 (two-tailed)

Note:	Robust standard errors are given in parentheses(clustered by state) a The widely-used likelihood-ratio tests for model fit and block significance testing Are not available for GEEs because GEEs are not based on full-information maximum likelihood. Fortunately, such models are fully amenable to Wald tests.

Thus far, it has been shown that explanatory variables affect the amount of interstate compact participation in the predicted manner. However, it is natural to ask whether these effects are substantively significant. How much more interstate participation would occur if  increase one of the variables was increased by a standard deviation? How many more interstate compacts would be observed during a 30 year period if one of the variables increased by a standard deviation? Table 3 gives answers to those questions.

One might also wonder about the predictive power of this analysis. As with all rare event data, the predicted number of interstate compact participation is quite low(King and Zeng, ‘Explaining Rare Events in International Relations’). However, the results from this analysis show that the predicted number of interstate compact participation for a state in gubernatorial election year(0.28) is about twice as small as the predicted number for a state in other years(0.47). The fact that simulations show that we can be highly confident(greater than 99 percent) that these predicted number are different provides support for the predictive power of this analysis.

The predicted amount of participation when all variables are at their means and modes is 0.47 with a 95 percent confidence interval (0.41, 0.53). The first column in Table 3 indicates the predicted amount of interstate compact participation when the row variable increases by one standard deviation, while other variables are held at their mean(unless otherwise specified). For instance, the predicted number of participation is 0.37(0.30, 0.45) when Federal Activism is one standard deviation above its mean and all other variables are at their means and modes. The second column indicates the change in the predicted number of participation when the row variable increases by one standard deviation. In other words, the second column captures the effect of aone standard deviation increase in the row variable on the predicted number of participation. Thus, an increase of one standard deviation in the Interparty Competition above its mean decreases the predicted number of participation by 0.05(0.10, 0.00) when all the other variables are at their means and modes.

This mean actually a decrease of interparty competition.

<Table 3> Influence of Explanatory Variables on Interstate Compact Participation

Variable	Predicted number of participationa	Difference in Predicted Countb	% Change in Predicted Count	Numerical Significancec
ElectYr (no to yes)	.28 (.23, .35)	-.19 (-.27, -.10)	-39.5 (-52.7, -23.7)	-5.7 (-.81, -3.0)
FederalActivism (+ 1D)	.37 (.30, .45)	-.10 (-.16, -.04)	-32.2 (-44.3, -.9.7)	-3.0 (-4.8, -1.2)
Neighbor (+ 1D)	.58 (.51, .67)	.11 (.06, .17)	23.9 (12.6, 35.6)	+3.3 (+1.8, +5.1)
BureaucraticPower (+ 1D)	.49 (.36, .51)	.08 (.02, .14)	19.4 (7.1, 25.1)	2.8 (+0.9, +3.5)
PartyCompetition (+ 1D)	.42 (.35, .50)	-.05 (-.10, .00)	-10.5 (-20.2, .2)	-1.5 (-3.0, +.0)
Heterogeneity (+ 1D)	.38 (.30, .46)	-.09 (-.15, -.05)	-20.0 (-32.1, -6.2)	-2.7 (-4.5, -.9)
LagParticipation (+ 1D)	.32 (.26, .40)	-.15 (-.19, -.11)	-31.3 (-39.6, -22.0)	-4.5 (-5.7, -3.3)

Note:	All estimates have 95 percent confidence intervals in parentheses.

a	All predicted counts and confidence intervals are computed based on the negative binominal(GEE) estimates using CLARIFY software(Tomz, Witteberg, and King 1998).

b	The third column indicates the difference in predicted counts when the variable changes from its mean value to one standard deviation higher.

c	Given the 30 year period, the fifth column presents how many more(or fewer) interstate compacts each state are expected to participate in if the variable was +1 above its mean.

The third and fourth columns provide perhaps the most substantively interesting information. The third column indicates the percentage change in the predicted number that arises from a one standard deviation increase in the row variable. Thus, a one standard deviation increase in Neighbor above its mean increases the predicted number of participation by 23.9 percent (12.6, 35.6) when all the other variables are set at their means and modes. It should be noted that although the predicted number of participation associated with the different scenarios presented in <Table 3> appear quite small, it is clearly the case that changes in each explanatory variable can be of significant substantive importance.

Finally, the forth column indicates how many more(or less) interstate participation there would be for a state during 30 year periods if the row variable increase by one standard deviation above its mean. This is calculated as the difference in the predicted number multiplied by 30 years. Thus, a one standard deviation increase in Heterogeneity above its mean would lead to 2,7(4.5, 0.9) less participation when all other variables are held at their mean. If it is in election year, then it would be expected to see 5.7(8.1, 3.0) less participation. Given that there were, on average, only 13 participation for one state, the numbers in this column represents substantial changes.

Taken together the results presented in <Table 3> indicate that the explanatory variables not only have a statistically significant effect on the amount of interstate compact participation but that they have a substantively meaningful effect as well. Even a small change in Federal Grant can have a significant effect on the amount of interstate compact participation when all others are held constant. If Federal Government reduced its federal involvement to state or local governments, the percentage change in the amount of interstate compact participation would be 67.8 percent, and there would be 3 fewer participations for a state.

Ⅵ. Conclusion

By using negative binominal generalized estimating equation(GEE) regression model instead of poisson regression model and negative binominal regression model, this study shows that the GEE model provides an exchangeable correlation of structure and more robust standard errors, and allows for the correct computation of statistical tests than poisson model or negative model. The GEE model allows for correct measurement of the true sampling variability, under conditions of heterogenity and evidence of overdispersion.

Why does one state government participate in interstate compacts more frequently than another? This study indicates that the answer to this question is multi-faceted, involving the actions of other vertical and horizontal governments both state and federal, and issues of political structure and capacity.

This study finds that states may still respond to national government pressures in specific circumstances, as Best and Teske(2002) find to be the case in their study of state taxation of internet sale. In some instances, federal law actively encourages compact participation, as was the case for the Low-Level Radioactive Waste Policy Act of 1980. In addition, states may respond to specific threats of federal preemption by entering into interstate compacts, such as the creation of the interstate compact on industrialized buildings(Voit et al., 2003). These results suggest that, on average, interstate compact participation recedes in the face of federal government involvement. When the upper-level government tries to deal with externalities within the lower level government, its involvement with the lower level government may exhaust the willingness of voluntary cooperation.

Another factor that affects a state’s propensity to join interstate compacts pertains to its relative geographic location. This study finds that the influence of geographic proximity becomes clearer. Proximate states are more likely to enter into compacts. These states effectively extend a state’s sphere of responsibility into other states, while simultaneously allowing other states to extend their reach within its borders, which may reduce the transaction costs of interstate cooperation(Bowman, 2002). Despite the potential benefits of interstate compacts, state officials often perceive the costs to far exceed the potential gain. Fixed geographic borders require repeated play among neighboring jurisdictions, and thus reduce costs by creating interdependencies and maintaining compacts. Many states, especially those that are geographically proximate with one another, appear willing to sacrifice their autonomy in an effort to mitigate social problems. States respond to their neighbors’ increased participation in interstate compacts by joining more themselves, a process which may be indicative of policy learning.

Evidence presented in this study reveals that bureaucratic capacity may also influence states’compacting decisions. States must maintain sufficient bureaucratic capacity to administer the compact(Zimmerman, 2002). These findings demonstrate that voluntary cooperation emerges not only from a dynamic political contracting process within a state government but also from an interaction with the federal government as well as other states governments. This study has, however, some limitations. First, the paper focuses on the number of compacts, and, therefore, may not provide the specific picture on how significant each compact is. Further study categorizing the types of interstate compacts may strengthen the ability to generalize these findings. Second, this study uses the data set of 48 states from 1961 to 1990. The use of update periods from 1991 to 2007 may be necessary in order to provide more accurate exploration for current utilization of interstate compacts in the United States. Third, this study finds the need for systematic empirical research on the action of vertical and horizontal government on interstate cooperation. For example, specific measures of horizontal influence such as professional associations, distance, and competition mechanism could also be important in interstate cooperation. These factors might be included in the future studies in order to enhance understanding of the influence of various horizontal relationships on interstate compact decisionmaking.

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김복태(金福泰): 2009년 플로리다 주립대학교 대학원에서 행정학 박사학위 (A Three Order Network Governance Framework and Public Network Development: Evidence from Community-Based Care (CBC) Networks in Florida)를 취득하였다. 주요관심 분야는, Network Governance, 교육정책, 성과관리, 사회복지정책 등이다. 최근의 주요 논문은 Public Administration Review and International Review of Public Administration 등에 게재되었다.

<E-mail: btk03c@fsu.edu / 논문접수일 2009. 4. 27 / 심사개시일 2009. 4. 29 / 심사완료일 2009. 5. 22>