This paper aims to investigate the possible strategic behavior among municipalities using social housing policy data. Using data available in Munic (2004, 2005 and 2008) and panel data regression, the results confirmed that there is evidence of a strategic behavior between municipalities when deciding the provision of public goods in social housing. Particularly, we found evidence that municipalities respond positively to the amount of policy of its neighbors. With each additional policy of the neighbors, the municipality in question increases its own provision by about 0,12 policy. Further tests, one of local spatial auto-correlation, and another that measures the evolution of policies, suggest that there is indeed a race to the bottom between Brazilian municipalities in terms of housing provision.
Local government efficiency; Race to the Bottom; Spatial autocorrelation
