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Rent-seeking, spillovers and the benefits of decentralization

  • Cheikbossian, Guillaume

In the presence of spillovers, decentralized provision of local public goods may lead to a higher surplus than centralized provision even though localities have identical preferences. Indeed, free-riding costs associated to decentralization can be lower than the costs of rent-seeking and influence activities under centralization. Actually, centralization yields a higher level of regional surplus only if both the spillover effect from local public spending is sufficiently large and the elasticity of the influence function is sufficiently small.

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Article provided by Elsevier in its journal Journal of Urban Economics.

Volume (Year): 63 (2008)
Issue (Month): 1 (January)
Pages: 217-228

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Handle: RePEc:eee:juecon:v:63:y:2008:i:1:p:217-228
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