In recent years, Italian policy-makers launched several austerity policies to rationalize local government. One of the most controversial of these is obliging small municipalities to manage local services cooperatively, 1 due to the historic Italian tradition of local self-government. Its first provision (decree-law No. 78/2010), extended a number of times, is that municipalities must compulsorily manage their basic functions in municipal unions (MUs) or in covenants, each representing a different degree of institutionalization. While the former are enti locali (local entities) with their own political and technical bodies, the latter are simple formal agreements for managing one or more services. Following Hulst and Van Montfort (2007, p. 12), public and private actors in the context of inter-municipal cooperation are assumed to be goal-oriented and rational, pursuing their interests, using their powers to achieve their goals. In the current Italian inter-municipal cooperation context, local administrators' main objectives are to conform to regional/national regulatory ABSTRACT despite the historical tradition of inter-municipal cooperation in several regions, the italian policy maker has for the first time decided to oblige small municipalities to co-manage their basic functions. although controversial because of its overly top-down logic, this provision is driving a "new" era of inter-municipal cooperation in italian regions: around 70% of italian municipalities must choose between a municipal union and a covenant in order to manage these functions. Regions can direct their municipalities towards different forms of inter-municipal cooperation with the use of monetary incentives, regulatory restrictions or persuasion. the paper develops an analytic framework to explore this process in two regional cases. the analysis highlights that despite the national constraints, the different regional strategies are increasingly conditioned by the legacies of the past.