National governments often delegate tasks and burdens to lower levels in a comprehensive system of administration. Local and regional governance thereby become an important factor in policy implementation. This paper focuses on the incentive problem that follows from the delegation of competences to collect taxes to the local level in a multi-level geo-administrative system. The paper uses the Danish administrative system to illustrate the actual outcomes from such incentive problems. It focuses on goal attainment in the presence of decentralised financing and offers policy recommendations with respect to policy design within decentralised financing systems. Setting up elaborate administrative systems will introduce agency problems in terms of financing that lead to inefficiencies in both local and national governance. Copyright (c) 2008 the author(s). Journal compilation (c) 2008 RSAI.
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Volume (Year): 87 (2008) Issue (Month): 4 (November) Pages: 567-587 Download reference. The following formats are available: HTML
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