Is Trust in Local Government Influenced by the “Marketplace” of Choice?

Abstract Governments are subjected to many sources of competition that can be productive or destructive to their ability to maintain citizen trust. This paper explores the role of competition in the local government marketplace as a determinant of trust in local government. Using individual respondent data from the Gallup Poll Social Series in the United States from 2001 to 2022, this paper explores the effect of policy space autonomy and availability of choice in government on trust in local government. We find evidence of productive competition increasing with the number of local governments in the respondent's labor market. Similarly, states that restrict the diversity of choice through tax and expenditure limits reduce productive competition, while limits on issuing debt enhance local trust. The results are supported by numerous robustness checks and a placebo test on trust in the federal government.