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Deciding about (de-)centralization of industrial policy: Delegation by a central authority vs. bargaining of regional governments

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  • Morasch, Karl
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    Abstract

    In the European Union the commission has the primary right to decide about industrial policy. Note that this includes the possibility to allow actions of member countries as long as these are not in conflict with the interest of the EU. This paper deals with the question whether such an assignment of decision rights is appropriate by comparing it with a more decentral system where the decision power is in the hands of the member countries which, however, may agree to delegate this power on a case by case basis to a central authority. The analysis is performed in an integrated Cournot duopoly with domestic and third country consumption. Here it depends on the export ratio and the degree of uncertainty whether industrial policy is better performed by a central authority that internalizes spillovers or by regional governments with superior information about the costs of the regional firm. To analyze how the initial allocation of decision rights affects the actual assignment of power for a specific industry we compare two situations: (i) An uninformed central authority decides about delegation to regional governments. (ii) Asymmetrically informed regional governments bargain about empowering a central authority. Interestingly delegation outperforms bargaining on average in a setting with side payments but without information transfer. If, however, signals obtained in the bargaining stage are used to update the own information, bargaining without side payments delivers in expectation a better result than delegation. -- Die europäische Kommission ist primärer Träger der Industriepolitik in der europäischen Union. Industriepolitische Aktivitäten der Mitgliedsländer können jedoch zugelassen werden, solange sie nicht den Interessen der Union zuwiderlaufen. Das vorliegende Papier beschäftigt sich mit der Frage, ob diese Zuordnung der Entscheidungsmacht sinnvoll ist. Dazu wird als Vergleichsbasis ein dezentrales System mit Befugnissen auf Seiten der einzelnen Länder, aber mit Möglichkeit zur fallweisen Delegation auf eine zentrale Instanz herangezogen. Analysiert wird das Problem im Rahmen eines Cournot Duopols auf einem integrierten Weltmarkt mit heimischem und Drittland-Konsum. Dabei hängt es von der Exportquote und dem Grad der Unsicherheit ab, ob Industriepolitik besser von einem zentralen Träger durchgeführt wird, der Spillovers internalisiert, oder von den regionalen Regierungen, die über bessere Informationen bezüglich der Kosten des jeweiligen regionalen Unternehmens verfügen. Um die Auswirkung der ursprünglichen Verteilung der Entscheidungsmacht auf die tatsächliche Zuordnung der Kompetenz in einer bestimmten Branche zu analysieren werden zwei Situationen verglichen: (i) Ein uninformierter zentraler Träger entscheidet über die Delegation an die regionalen Regierungen. (ii) Asymmetrisch informierte regionale Regierungen verhandeln darüber, ob die Industriepolitik regional oder durch eine zentrale Instanz durchgeführt werden soll. Interessanterweise schneidet bei Verhandlungen mit Seitenzahlungen die Delegationslösung trotz der Informationsvorteile der regionalen Regierungen im Durchschnitt besser ab, solange im Rahmen der Verhandlung kein Informationstransfer erfolgt. Werden jedoch die im Rahmen der Verhandlung empfangenen Signale zur Anpassung der eigenen Wahrscheinlichkeitsschätzungen herangezogen, so ist die Verhandlungslösung ohne Seitenzahlungen zumindest im Erwartungswert effizienter.

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    Bibliographic Info

    Paper provided by Universität der Bundeswehr München, Economic Research Group in its series Working Papers in Economics with number 2003,3.

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    Date of creation: 2003
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    Handle: RePEc:zbw:ubwwpe:20033

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    Keywords: Delegation; Bargaining; Industrial policy; (De-)centralization; Verhandlungen; Industriepolitik; (De-)Zentralisierung; Produktdifferentierung;

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