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Local government co-financing of the central government's transport infrastructure investment

Author

Listed:
  • Hammes, Johanna Jussila
  • Mandell, Svante

Abstract

We study two districts’ voluntary co-financing of a centrally provided public good, e.g., transport infrastructure. Outcomes are compared to a surplus-maximizing level of public good provision. We show that both co-financing and lobbying raise the amount of public good provided. Co-financing and lobbying are substitutes. Co-financing (or co-financing combined with lobbying) raises the provision of the public good to a higher level than lobbying alone. Co-financing can thus reduce rent-seeking. Finally, we show that under uncertainty about district type (high or low benefit), co-financing combined with lobbying can be used to find and retain a separating equilibrium.

Suggested Citation

  • Hammes, Johanna Jussila & Mandell, Svante, 2019. "Local government co-financing of the central government's transport infrastructure investment," Economics of Transportation, Elsevier, vol. 18(C), pages 40-49.
    • Handle: RePEc:eee:ecotra:v:18:y:2019:i:c:p:40-49
    DOI: 10.1016/j.ecotra.2019.03.001
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    Citations

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    Cited by:

    1. Bondemark, Anders & Andersson, Henrik & Brundell-Freij, Karin, 2023. "Do the distributional preferences of national infrastructure planners diverge from those of the public?," Transportation Research Part A: Policy and Practice, Elsevier, vol. 170(C).
    2. Baños-Pino, José F. & Boto-García, David & Zapico, Emma, 2022. "Persistence and dynamics in the efficiency of toll motorways: The Spanish case," Economics of Transportation, Elsevier, vol. 31(C).
    3. Jussila Hammes, Johanna & Volden, Gro Holst & Welde, Morten & Börjesson, Maria & Odeck, James, 2021. "Finding transport projects with high value for money : what are the socio-geographic determinants?," Working Papers 2021:4, Swedish National Road & Transport Research Institute (VTI).

    More about this item

    Keywords

    Co-financing; Fiscal federalism; Lobbying; Rent-seeking; Separating equilibrium;
    All these keywords.

    JEL classification:

    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H4 - Public Economics - - Publicly Provided Goods
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • R5 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis

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