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On Cooperation in Musgravian Models of Externalities within a Federation

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Henry Tulkens ()

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Abstract

"Musgravian" externalities, formulated and illustrated by Musgrave in a 1966 paper on "social goods" are seen in this paper as one form of the interactions that occur between the components of a federation. The original formal apparatus is first exposed briefly. In that context, it is then considered whether and how alternative forms of federal structures are likely to achieve efficiency. Following suggestions from the literature, three such forms are dealt with: "planned", "cooperative" and "majority rule" federalisms. Next, the relevance of non cooperative equilibria is examined, in the light of an interpretation of them as "fall back" positions when disagreement occurs among members of a federation. Finally, the question is evoked of what economics and public finance may have to say on the limits to institutional decentralization, i.e. on the choice between federal, confederal and secessional structures. The paper concludes with a reminder of Musgrave's view on this issue.

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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number CESifo Working Paper No. 701.

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Date of creation: 2002
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Handle: RePEc:ces:ceswps:_701

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Find related papers by JEL classification:
D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
H10 - Public Economics - - Structure and Scope of Government - - - General
H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General

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  1. GERMAINÊ , Marc & TOINTÊ, PhilippeÊ & TULKENSÊ, Henry, 1995. "International Negotiations on Acid Rains in Northern Europe : A Discrete Time Iterative Process," CORE Discussion Papers 1995056, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  2. Dreze, Jacques H & de la Vallee Poussin, D, 1971. "A Tatonnement Process for Public Goods," Review of Economic Studies, Blackwell Publishing, vol. 38(114), pages 133-50, April. [Downloadable!] (restricted)
  3. Elinor Ostrom, 2000. "Collective Action and the Evolution of Social Norms," Journal of Economic Perspectives, American Economic Association, vol. 14(3), pages 137-158, Summer. [Downloadable!] (restricted)
  4. Chander, Parkash & Tulkens, Henry, 1994. "A Core-Theoretic Solution for the Design of Cooperative Agreements on Transfrontier Pollution," Working Papers 897, California Institute of Technology, Division of the Humanities and Social Sciences. [Downloadable!]
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  5. Henry Tulkens & Parkash Chander, 1997. "The Core of an Economy with Multilateral Environmental Externalities," International Journal of Game Theory, Springer, vol. 26(3), pages 379-401.
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  6. Tulkens, Henry, 1978. "Dynamic processes for public goods : An institution-oriented survey," Journal of Public Economics, Elsevier, vol. 9(2), pages 163-201, April. [Downloadable!] (restricted)
  7. Musgrave, Richard A, 1997. "Devolution, Grants, and Fiscal Competition," Journal of Economic Perspectives, American Economic Association, vol. 11(4), pages 65-72, Fall. [Downloadable!] (restricted)
  8. Robert Inman & Daniel L. Rubinfeld, 1997. "Rethinking Federalism," Berkeley Olin Program in Law & Economics, Working Paper Series 1140, Berkeley Olin Program in Law & Economics. [Downloadable!]
  9. Inman, Robert P & Rubinfeld, Daniel L, 1997. "Rethinking Federalism," Journal of Economic Perspectives, American Economic Association, vol. 11(4), pages 43-64, Fall. [Downloadable!] (restricted)
  10. Bergstrom, Theodore & Blume, Lawrence & Varian, Hal, 1986. "On the private provision of public goods," Journal of Public Economics, Elsevier, vol. 29(1), pages 25-49, February. [Downloadable!] (restricted)
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