The purpose of this research was to identify the impact of the size of local government units on the local public services, whether small or large local government units are preferable for the implementation of effective local governance. A whole complex of financial and socio-economic indicators from 465 amalgamated communities in Armenia, as well as the newly formed 52 clusters, were collected and analyzed, by creating a database and polynomial regression models to quantitatively measure the impact of the size of local government units on the provision of public services. The analysis has quantitatively proven that for certain public services it would be more favorable to have larger local government units, however, the small and medium-size consolidated clusters do not provide a significant increase in the provision of public services. Thus, for having substantial outcomes from consolidation the new local government units have to be much larger than they were before. Moreover, effective local governance requires both large and small local government units with its own powers and responsibilities.  Disclosure of such relationships can be useful not only for ensuring better reforms in territorial administration and local governance but also for contributing to the theory and practice of public administration and local government.