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Public Goods in Trade on the Formation of Markets and Jurisdictions

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Author Info
Alessandra Casella (Columbia University, GREQAM, NBER, and CEPR, U.S.A.)
Jonathan S. Feinstein (Yale University, U.S.A.)

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Abstract

Must the integration of markets be accompanied by the harmonization of societies' institutions? We study a model of heterogenous individuals where a public good directly affects returns from trade. Trade takes place in the market, whereas the public good is provided by the jurisdiction, and individuals choose which market and which jurisdiction to join. Although trade between different jurisdictions entails transaction costs, only at intermediate market sizes must trading partners belong to a single jurisdiction. When markets are small, multiple jurisdictions can exist, although a single one is preferable; when markets are large, multiple jurisdictions are both possible and desirable. Copyright Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association

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Article provided by Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association in its journal International Economic Review.

Volume (Year): 43 (2002)
Issue (Month): 2 (May)
Pages: 437-462
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Handle: RePEc:ier:iecrev:v:43:y:2002:i:2:p:437-462

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  1. Klaas Staal, 2006. "Country size and publicly provided goods," Discussion Papers 187, SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich. [Downloadable!]
  2. Marianna Belloc & Samuel Bowles, 2009. "International Trade, Factor Mobility and the Persistence of Cultural-Institutional Diversity," Working Papers 2009-08, University of Massachusetts Amherst, Department of Economics. [Downloadable!]
  3. Klaas Staal, 2004. "Country Size and Public Good Provision," Tinbergen Institute Discussion Papers 04-026/1, Tinbergen Institute. [Downloadable!]
  4. Zissimos, Ben & Wooders, Myrna, 2005. "Relaxing Tax Competition through Public Good Differentation," The Warwick Economics Research Paper Series (TWERPS) 737, University of Warwick, Department of Economics. [Downloadable!]
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  5. Grégoire ROTA-GRAZIOSI, 2006. "Economic integration and political fragmentation," Working Papers 200628, CERDI. [Downloadable!]
  6. Marianna Belloc & Samuel Bowles, 2009. "International Trade, Factor Mobility and the Persistence of Cultural-Institutional Diversity," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  7. Stegarescu, Dan, 2004. "Economic Integration and Fiscal Decentralization : Evidence from OECD Countries," ZEW Discussion Papers 04-86, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
  8. Daniel Brou & Michele Ruta, 2004. "A Positive Explanation of EU Enlargement," Economics Working Papers ECO2004/30, European University Institute. [Downloadable!]
  9. Nikitas Konstantinidis, 2007. "Gradualism and Uncertainty in International Union Formation," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  10. K Staal, 2004. "Country size and public good provision," Econometric Society 2004 Australasian Meetings 156, Econometric Society. [Downloadable!]
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