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Centralization vs. Decentralization: A Principal-Agent Analysis

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Author Info
MARIANO TOMMASI
FEDERICO WEINSCHELBAUM

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Abstract

The decision to allocate policy jurisdictions to different levels of government is related to a number of trade-offs between the advantages and disadvantages of centralized versus decentralized provision of public services. A trade-off central to many discussions is that between the internalization of externalities under centralization versus an "accountability" advantage of decentralization. In this paper we formalize this trade-off in the context of a class of principal-agent models known as common agency. Copyright 2007 Blackwell Publishing, Inc..

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File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.1467-9779.2007.00311.x
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Publisher Info
Article provided by Association for Public Economic Theory in its journal Journal of Public Economic Theory.

Volume (Year): 9 (2007)
Issue (Month): 2 (04)
Pages: 369-389
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Handle: RePEc:bla:jpbect:v:9:y:2007:i:2:p:369-389

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  1. John William Hatfield & Gerard Padró i Miquel, 2009. "A Political Economy Theory of Partial Decentralization," NBER Working Papers 14628, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  2. Lars P. Feld & Christoph A. Schaltegger & Jan Schnellenbach, 2005. "On Government Centralization and Fiscal Referendums: A Theoretical Model and Evidence from Switzerland," CREMA Working Paper Series 2005-18, Center for Research in Economics, Management and the Arts (CREMA). [Downloadable!]
    Other versions:
  3. Pedro Barros & Xavier Martinez-Giralt, 2009. "Contractual design and PPPs for hospitals: lessons for the Portuguese model," The European Journal of Health Economics, Springer, vol. 10(4), pages 437-453, October. [Downloadable!] (restricted)
  4. Marcelin Joanis, 2009. "Intertwined Federalism: Accountability Problems under Partial Decentralization," CIRANO Working Papers 2009s-39, CIRANO. [Downloadable!]
    Other versions:
  5. Giampaolo Garzarelli, 2005. "Cognition, Incentives, and Public Governance:Laboratory Federalism from the Organizational Viewpoint," Public Economics 0512013, EconWPA. [Downloadable!]
  6. Giampaolo Garzarelli, 2005. "Old and New Theories of Fiscal Federalism, Organizational Design Problems, and Tiebout," Public Economics 0509009, EconWPA. [Downloadable!]
  7. Guccio, Calogero & Pignataro, Giacomo & Rizzo, Ilde, 2009. "The performance of local government in the execution of public works," MPRA Paper 16094, University Library of Munich, Germany. [Downloadable!]
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