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Public Good Provision in a Federalist Country: Tiebout Competition, Fiscal Equalization, and Incentives for Efficiency in Switzerland

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  • Philippe K. Widmer

    ()
    (Socioeconomic Institute, University of Zurich)

  • Peter Zweifel

    ()
    (Socioeconomic Institute, University of Zurich)

Abstract

The purpose of this paper is twofold. First, it measures the efficiency in the provision of public goods by local jurisdictions applying Data Envelopment Analysis (DEA). Second, it relates ef- ficiency scores to a fiscal equalization scheme designed to mitigate the negative consequences of Tiebout competition. The data come from the 26 cantons of Switzerland (2000-2004), a country characterized by marked federalism. Results show the equalization scheme to indeed have a negative influence on performance, resulting in an efficiency-equity trade-off (Stiglitz, 1988). However, substitution of earmarked payments by lump-sum payments as part of the 2008 reform is likely to enhance cantonal performance.

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File URL: http://www.soi.uzh.ch/research/wp/2008/wp0804.pdf
File Function: revised version, 2010
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Bibliographic Info

Paper provided by Socioeconomic Institute - University of Zurich in its series SOI - Working Papers with number 0804.

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Length: 27 pages
Date of creation: Apr 2008
Date of revision: Dec 2010
Handle: RePEc:soz:wpaper:0804

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Keywords: DEA; efficiency measurement; federalism; fiscal equalization; public finance; Switzerland; Tiebout competition;

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References

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Citations

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Cited by:
  1. Villani, Salvatore, 2010. "Per un giusto equilibrio tra efficacia ed efficienza nell’attuazione della legge delega sul federalismo fiscale: verso la definizione dei LEP e dei costi standard delle Regioni," MPRA Paper 29513, University Library of Munich, Germany.
  2. Villani, Salvatore, 2010. "Elementi ai fini della definizione della nozione di costo standard: una rassegna della letteratura e delle principali esperienze estere
    [Basic elements defining the standard cost concept. A survey
    ," MPRA Paper 29683, University Library of Munich, Germany.

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