We model the trade-off between centralized and decentralized decision making over the provision of local public goods. Centralized decisions are made in a legislature of locally elected representatives, and this creates a conflict of interest between citizens in different jurisdictions. The legis lature can be self-interested or benevolent and this can result in either efficient, excessive or misallocative provision of public goods. Decisions are influenced by spill over effects and differences in jurisdictional size. Furthermore, we look at the incentives for centralization.
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Paper provided by SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich in its series Discussion Papers with number
236.
Find related papers by JEL classification: H40 - Public Economics - - Publicly Provided Goods - - - General H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General P51 - Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems
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