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On Local Environmental Protection

  • Fabio Fiorillo

    ()

    (University “Politecnica delle Marche”, Italy, Department of Economics)

  • Agnese Sacchi

    ()

    (University Roma Tre, Italy, Department of Economics)

We propose a theoretical model to analyze the provision of environmental protection activities with positive interregional externalities in order to verify whether this kind of policy is better accomplished through centralized policymaking, which implies a coordinated solution among local representatives, or by a decentralized system, where local authorities independently finance and implement their environmental protection policy. The research question concerns the identification of criteria on how to allocate powers and functions to environmental management at different tiers of government. Moreover, modelling interregional externalities as a mechanism contributing to lowering the cost of financing environmental policy in each region allows different environmental policies across regions. Given this framework, considerations favouring either institutional setting in terms of individuals’ welfare seem to involve the interaction among these key elements: the extent of the inter-jurisdictional spillovers, the size of local jurisdictions, and the intensity of regional preferences for environmental policy.

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Article provided by Danubius University of Galati in its journal Euroeconomica.

Volume (Year): (2012)
Issue (Month): 5(31) (December)
Pages: 28-42

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Handle: RePEc:dug:journl:y:2012:i:5:p:28-42
Contact details of provider: Web page: http://www.euroeconomica-danubius.ro/

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  1. Portney, Paul & Oates, Wallace, 2001. "The Political Economy of Environmental Policy," Discussion Papers dp-01-55, Resources For the Future.
  2. Ben Lockwood, 2002. "Distributive Politics and the Costs of Centralization," Review of Economic Studies, Oxford University Press, vol. 69(2), pages 313-337.
  3. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64, pages 416.
  4. Kanbur, Ravi & Keen, Michael, 1993. "Jeux Sans Frontieres: Tax Competition and Tax Coordination When Countries Differ in Size," American Economic Review, American Economic Association, vol. 83(4), pages 877-92, September.
  5. Conley, John & Dix, Manfred, 1999. "Optimal and Equilibrium Membership in Clubs in the Presence of Spillovers," Journal of Urban Economics, Elsevier, vol. 46(2), pages 215-229, September.
  6. Wallace E. Oates, 1999. "An Essay on Fiscal Federalism," Journal of Economic Literature, American Economic Association, vol. 37(3), pages 1120-1149, September.
  7. Markusen, James R & Wigle, Randall M, 1989. "Nash Equilibrium Tariffs for the United States and Canada: The Roles of Country Size, Scale Economies, and Capital Mobility," Journal of Political Economy, University of Chicago Press, vol. 97(2), pages 368-86, April.
  8. Fabio Fiorillo & Agnese Sacchi, 2011. "Free-riding or Internalizing? An Opportunistic View on Decentralization versus Centralization," CESifo Working Paper Series 3328, CESifo Group Munich.
  9. Kunce, Mitch & Shogren, Jason F., 2005. "On interjurisdictional competition and environmental federalism," Journal of Environmental Economics and Management, Elsevier, vol. 50(1), pages 212-224, July.
  10. Picard Pierre & Gilbert G, 1991. "Incentives and the optimal size of local territories," CEPREMAP Working Papers (Couverture Orange) 9124, CEPREMAP.
  11. Besley, Timothy & Coate, Stephen, 2003. "Centralized versus decentralized provision of local public goods: a political economy approach," Journal of Public Economics, Elsevier, vol. 87(12), pages 2611-2637, December.
  12. Robert Dur & Klaas Staal, 2007. "Local Public Good Provision, Municipal Consolidation, and National Transfers," CESifo Working Paper Series 2061, CESifo Group Munich.
  13. Wellisch Dietmar, 1995. "Locational Choices of Firms and Decentralized Environmental Policy with Various Instruments," Journal of Urban Economics, Elsevier, vol. 37(3), pages 290-310, May.
  14. Gilbert, Guy & Picard, Pierre, 1996. "Incentives and optimal size of local jurisdictions," European Economic Review, Elsevier, vol. 40(1), pages 19-41, January.
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