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Decentralization of Industrial Policy as Strategic Delegation

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    Abstract

    What is the appropriate degree of centralization in the context of industrial policy? The basic advantage of centralization results from internalization of external effects. While most of the literature stresses the superior information of regional authorities as a countervailing force, the present paper discusses another argument in favor of decentralization: Delegation of authority to regional governments will improve the position of the home country in the policy game with a foreign government. In a linear Cournot oligopoly with two domestic regions delegation is shown to be profitable if the domestic industry comprises at least twice as many firms as the foreign industry.

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    File URL: http://www.wiwi.uni-augsburg.de/vwl/institut/paper/193.pdf
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    Bibliographic Info

    Paper provided by Universitaet Augsburg, Institute for Economics in its series Discussion Paper Series with number 193.

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    Length: pages
    Date of creation: Feb 2000
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    Handle: RePEc:aug:augsbe:0193

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    Cited by:
    1. Juan Luis Jiménez & Javier Campos, 2004. "Efectos de la descentralización de la política de defensa de la competencia," Documentos de trabajo conjunto ULL-ULPGC 2004-09, Facultad de Ciencias Económicas de la ULPGC.

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