As thcre are four possiblc outcomes, three dummy variables are necessary: Mayors no CA Impounded in

intercept term
Mayor/with CA MCA
CiM ono CA CMNCA
CM /CA CM CA

The mayors no CA represents the relationship least likely to provide effective control. Therefore, the three dummies should have significant
negative coefficients if control is effective, i.e., expendi- ture levels are reduced. CMCA has the greatest potential tor control and, therefore, if
both CM and CA arc effective, should have the largest negative coefficient and i value.