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Contractual Fiscal Equivalence versus Geographical Fiscal Equivalence

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  • Eusepi, Giuseppe

Abstract

This work extends the contractual procedure, normally used in the relationships among persons, to intergovernmental relationships namely those among local jurisdictions. This changing in perspective challenges the efficiency criterion based on geographical fiscal equivalence; in fact the level of equilibrium does not depend on the level of the public good provided per se; it rather depends on the fiscal system, on the position of the median voter, on whether interjurisdictional mobility is either favoured or forbidden, and finally on whether the central government uses transfers either for redistributive purposes or as payments of the services provided by local jurisdictions. In particular, the paper shows that if two jurisdictions of the same level are allowed to have contractual relationships (horizontal relationships) the more efficient of the two can sell the service also to the less efficient, so reducing citizens' unit costs. Copyright 2000 by Kluwer Academic Publishers

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  • Eusepi, Giuseppe, 2000. "Contractual Fiscal Equivalence versus Geographical Fiscal Equivalence," Public Choice, Springer, vol. 104(3-4), pages 309-317, September.
    • Handle: RePEc:kap:pubcho:v:104:y:2000:i:3-4:p:309-17
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    Cited by:

    1. Jae Kim & Seung-Nam Kim & Soogwan Doh, 2015. "The distance decay of willingness to pay and the spatial distribution of benefits and costs for the ecological restoration of an urban branch stream in Ulsan, South Korea," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 54(3), pages 835-853, May.
    2. Giuseppe Eusepi & Edgar Wilson, 2008. "How to make a dis-entrepreneur of the Schumpeterian entrepreneur: the impact of institutional settings on growth," Public Choice, Springer, vol. 136(1), pages 39-54, July.

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