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Health care expenditure decisions in the presence of devolution and equalisation grants

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  • Rosella Levaggi
  • Francesco Menoncin

Abstract

In a model where health care provision, its regional distribution and the equalisation grant are the result of a utilitarian bargaining between a (relatively) rich region and a poor one, a First Best solution can be reached only if the two Regions have the same bargaining power. From a policy point of view, our model may explain the observed cross-national differences in the redistributive power of health care expenditure and it suggests that to equalise resources across Regions an income based equalisation grant may be preferred because it causes less distortions than an expenditure based one. Copyright Springer Science+Business Media New York 2014

Suggested Citation

  • Rosella Levaggi & Francesco Menoncin, 2014. "Health care expenditure decisions in the presence of devolution and equalisation grants," International Journal of Health Economics and Management, Springer, vol. 14(4), pages 355-368, December.
    • Handle: RePEc:kap:ijhcfe:v:14:y:2014:i:4:p:355-368
    DOI: 10.1007/s10754-014-9153-x
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    Cited by:

    1. Rosella Levaggi & Francesco Menoncin, 2017. "Would less regional income distribution justify the present call for devolution?," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 24(5), pages 780-799, September.

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    More about this item

    Keywords

    Health care expenditure; Equalisation grants; Devolution; Utilitarian bargaining; H51; H77; D6; C70;
    All these keywords.

    JEL classification:

    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • D6 - Microeconomics - - Welfare Economics
    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General

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