Inefficient Local Regulation of Local Externalities
AbstractSince only the residents of a single jurisdiction are affected by local consumption externalities, local regulation might be expected to be inefficient. Yet when production has increasing returns to scale, one jurisdiction's choice of regulatory standard affects the prices and availability of goods in other jurisdictions. These extra-jurisdictional effects can lead to inefficient outcomes with local regulation. Because of commitment failure, jurisdictions may choose divergent standards when an intermediate one is Pareto superior. There may also be coordination failures. The results question the usefulness of "subsidiarity" and "fiscal equivalence" as commonly conceived.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Duke University, Department of Economics in its series Working Papers with number 02-32.
Date of creation: 2002
Date of revision:
Contact details of provider:
Postal: Department of Economics Duke University 213 Social Sciences Building Box 90097 Durham, NC 27708-0097
Phone: (919) 660-1800
Fax: (919) 684-8974
Web page: http://econ.duke.edu/
Find related papers by JEL classification:
- D62 - Microeconomics - - Welfare Economics - - - Externalities
- H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects
- K32 - Law and Economics - - Other Substantive Areas of Law - - - Environmental, Health, and Safety Law
This paper has been announced in the following NEP Reports:
- NEP-ALL-2003-02-18 (All new papers)
- NEP-GEO-2003-02-18 (Economic Geography)
- NEP-LAW-2003-02-18 (Law & Economics)
You can help add them by filling out this form.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Department of Economics Webmaster).
If references are entirely missing, you can add them using this form.