A dynamic game for fiscal federalism with non-local externalities
We address the questions of the patterns and the efficiency of public intervention in a dynamic game model between public agencies in charge of a non-local externality. We give two examples: pollution spreading between water basins (negative externality), and non-uniform contributions from the elite and from the mass to a cultural background (positive externality). We define two extreme cases, depending on whether or not the receiving end of the externality balances the transmitting end. When both balance, the reactivity of the agency structure is strong and the need for redistribution between them is weak. When they do not balance, the externality is more markedly non-local and redistribution is required to balance the fiscal burden (or product) from pigouvian instruments among all beneficiaries. We show that, with a static rule of redistribution that allows them to compute transfers between them as a function of their own strategies, the decentralized agencies' reactivity is somewhat slowed, but they still react faster and more efficiently than a static central agency.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Mark D. Partridge & Dan S. Rickman, 1999. "Static and Dynamic Externalities, Industry Composition, and State Labor Productivity: A Panel Study of States," Southern Economic Journal, Southern Economic Association, vol. 66(2), pages 319-335, October.
- Glaeser, Edward Ludwig & Kallal, Hedi D. & Scheinkman, Jose A. & Shleifer, Andrei, 1992.
"Growth in Cities,"
3451309, Harvard University Department of Economics.
- Sushil Bikhchandani & David Hirshleifer & Ivo Welch, 2010.
"A theory of Fads, Fashion, Custom and cultural change as informational Cascades,"
Levine's Working Paper Archive
1193, David K. Levine.
- Bikhchandani, Sushil & Hirshleifer, David & Welch, Ivo, 1992. "A Theory of Fads, Fashion, Custom, and Cultural Change in Informational Cascades," Journal of Political Economy, University of Chicago Press, vol. 100(5), pages 992-1026, October.
- Luc Champarnaud & Victor Ginsburgh & Philippe Michel, 2008.
"Can public arts education replace arts subsidization?,"
Journal of Cultural Economics,
Springer, vol. 32(2), pages 109-126, June.
- CHAMPARNAUD, Luc & GINSBURGH, Victor & MICHEL, Philippe, . "Can public arts education replace arts subsidization?," CORE Discussion Papers RP 2130, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Victor Ginsburgh & Luc Champarnaud & Philippe Michel, 2008. "Can public arts education replace arts subsidization?," ULB Institutional Repository 2013/13396, ULB -- Universite Libre de Bruxelles.
- Elish Kelly & John O’Hagan, 2007. "Geographic clustering of economic activity: The case of prominent western visual artists," Journal of Cultural Economics, Springer, vol. 31(2), pages 109-128, June.
- Throsby, David, 1994. "The Production and Consumption of the Arts: A View of Cultural Economics," Journal of Economic Literature, American Economic Association, vol. 32(1), pages 1-29, March.
- Dockner,Engelbert J. & Jorgensen,Steffen & Long,Ngo Van & Sorger,Gerhard, 2000. "Differential Games in Economics and Management Science," Cambridge Books, Cambridge University Press, number 9780521637329, June.
- AMBEC, Steve & SPRUMONT, Yves, 2000.
"Sharing a River,"
Cahiers de recherche
2000-08, Universite de Montreal, Departement de sciences economiques.
- Ambec, S. & Sprumont, Y., 2000. "Sharing a River," Cahiers de recherche 2000-08, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
- Ambec, Stefan & Sprumont, Yves, 2000. "Sharing a River," Cahiers de recherche 0006, GREEN.
- Ambec, S. & Sprumont, Y., 2000. "Sharing a River," Papers 00-06, Laval - Recherche en Energie.
- Edward P. Lazear, 1999.
"Culture and Language,"
Journal of Political Economy,
University of Chicago Press, vol. 107(S6), pages S95-S126, December.
- Scitovsky, Tibor, 1981. "The Desire for Excitement in Modern Society," Kyklos, Wiley Blackwell, vol. 34(1), pages 3-13.
- GINSBURGH, Victor, .
"Awards, success and aesthetic quality in the arts,"
CORE Discussion Papers RP
1616, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Tyler Cowen & Alexander Tabarrok, 2000. "An Economic Theory of Avant-Garde and Popular Art, or High and Low Culture," Southern Economic Journal, Southern Economic Association, vol. 67(2), pages 232-253, July.
- Wallace E. Oates, 1999. "An Essay on Fiscal Federalism," Journal of Economic Literature, American Economic Association, vol. 37(3), pages 1120-1149, September.
When requesting a correction, please mention this item's handle: RePEc:eee:reecon:v:67:y:2013:i:4:p:328-335. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)
If references are entirely missing, you can add them using this form.