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The (Non)equivalence Theorem When There Are Matching Grants as Well as Lump Sum Grants

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  • Barnett, Richard R

Abstract

In developing their influential equivalence theorem Bradford and Oates (1971) implicitly assume that there is a lump sum grant only. This paper explores whether the equivalence result continues to hold when the lump sum grant is part of a program of grants-in-aid which includes a matching grant. It is shown that the equivalence result as stated by Bradford and Oates does not hold in these more general circumstances; however, a much weaker equivalence result does hold. This finding is important because there has been a tendency in the empirical literature to assume that the equivalence result holds under quite general circumstances. It is also shown her e that the combined use of lump sum and matching grants can produce a reverse flypaper effect. Copyright 1993 by Kluwer Academic Publishers

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  • Barnett, Richard R, 1993. "The (Non)equivalence Theorem When There Are Matching Grants as Well as Lump Sum Grants," Public Choice, Springer, vol. 75(4), pages 363-369, April.
    • Handle: RePEc:kap:pubcho:v:75:y:1993:i:4:p:363-69
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    Cited by:

    1. Yihua Yu & Jing Wang & Xi Tian, 2016. "Identifying the Flypaper Effect in the Presence of Spatial Dependence: Evidence from Education in China's Counties," Growth and Change, Wiley Blackwell, vol. 47(1), pages 93-110, March.
    2. Malakhov, Vladimir (Малахов, Владимир) & Simon, Mark (Симон, Марк), 2017. "Migration Policy in the Conditions of Economic Turbulence: The Experience of the European Union and the Prospects of Russia," Working Papers 051723, Russian Presidential Academy of National Economy and Public Administration.

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