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"Reverse" Intergovernmental Transfers Between Regions with Local Public Goods

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  • John M. Hartwick

    ()
    (Queen's University)

Abstract

We report on the nature of a utility optimizing transfer from one regional government to another when local public goods are present. Computer examples reveal that small differences in regional endowments result in large differences in equilibrium outcomes for two regions, under optimal transfers. The scale effect (lower tax charge per person for the same public good in more populous regions) leads to the small region generally providing transfers to the larger region.

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File URL: http://qed.econ.queensu.ca/working_papers/papers/qed_wp_1221.pdf
File Function: First version 2009
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Bibliographic Info

Paper provided by Queen's University, Department of Economics in its series Working Papers with number 1221.

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Length: 17 pages
Date of creation: Nov 2009
Date of revision:
Handle: RePEc:qed:wpaper:1221

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Keywords: intergovernmental transfers; local public goods; inter-regional resource allocation;

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  1. Flatters, Frank & Henderson, Vernon & Mieszkowski, Peter, 1974. "Public goods, efficiency, and regional fiscal equalization," Journal of Public Economics, Elsevier, vol. 3(2), pages 99-112, May.
  2. Mansoorian, Arman & Myers, Gordon M., 1997. "On the consequences of government objectives for economies with mobile populations," Journal of Public Economics, Elsevier, vol. 63(2), pages 265-281, January.
  3. Sam Bucovetsky & Michael Smart, 2006. "The Efficiency Consequences of Local Revenue Equalization: Tax Competition and Tax Distortions," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 8(1), pages 119-144, 01.
  4. John M. Hartwick, 1980. "The Henry George Rule, Optimal Population, and Interregional Equity," Canadian Journal of Economics, Canadian Economics Association, vol. 13(4), pages 695-700, November.
  5. Antonio Ciccone & Robert E. Hall, 1993. "Productivity and the Density of Economic Activity," NBER Working Papers 4313, National Bureau of Economic Research, Inc.
  6. Mansoorian, Arman & Myers, Gordon M., 1993. "Attachment to home and efficient purchases of population in a fiscal externality economy," Journal of Public Economics, Elsevier, vol. 52(1), pages 117-132, August.
  7. Edward L. Glaeser & David C. Mare, 1994. "Cities and Skills," NBER Working Papers 4728, National Bureau of Economic Research, Inc.
  8. Robin Boadway, 2003. "The Theory and Practice of Equalization," Working Papers 1016, Queen's University, Department of Economics.
  9. Marko Köthenbürger, 2002. "Tax Competition and Fiscal Equalization," International Tax and Public Finance, Springer, vol. 9(4), pages 391-408, August.
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