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The flypaper effect and competition in the local market for public goods

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  • Mark Schneider
  • Byung Ji

Abstract

In this paper, we explore how the ability of bureaucrats to extract resources from their community may be limited by competition in the local market for public goods. Specifically, we examine intergovernmental aid as a resource bureaucrats seek to control. Intergovernmental aid has been found to be more stimulative of local government expenditures than predicted by neo-classical economic theory. In this research, the ‘flypaper effect’ is used as an indicator of the ability of bureaucrats to control local resources in excess of local demand and preferences. We empirically relate variation in the flypaper effect to the extent of competition in the local market for public goods. Competition does not consistently limit the flypaper effect. The implications of this finding for theories of competition in the local market for public goods are then discussed. Copyright Martinus Nijhoff Publishers 1987

Suggested Citation

  • Mark Schneider & Byung Ji, 1987. "The flypaper effect and competition in the local market for public goods," Public Choice, Springer, vol. 54(1), pages 27-39, January.
    • Handle: RePEc:kap:pubcho:v:54:y:1987:i:1:p:27-39
    DOI: 10.1007/BF00123803
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    References listed on IDEAS

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    1. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64(5), pages 416-416.
    2. Miller, Gary J. & Moe, Terry M., 1983. "Bureaucrats, Legislators, and the Size of Government," American Political Science Review, Cambridge University Press, vol. 77(2), pages 297-322, June.
    3. Chubb, John E., 1985. "The Political Economy of Federalism," American Political Science Review, Cambridge University Press, vol. 79(4), pages 994-1015, December.
    4. Baumol, William J, 1982. "Contestable Markets: An Uprising in the Theory of Industry Structure," American Economic Review, American Economic Association, vol. 72(1), pages 1-15, March.
    5. Romer, Thomas & Rosenthal, Howard, 1982. "Median Voters or Budget Maximizers: Evidence from School Expenditure Referenda," Economic Inquiry, Western Economic Association International, vol. 20(4), pages 556-578, October.
    6. Filimon, Radu & Romer, Thomas & Rosenthal, Howard, 1982. "Asymmetric information and agenda control : The bases of monopoly power in public spending," Journal of Public Economics, Elsevier, vol. 17(1), pages 51-70, February.
    7. Thomas McGuire & Michael Coiner & Larry Spancake, 1979. "Budget-maximizing agencies and efficiency in government," Public Choice, Springer, vol. 34(3), pages 333-357, September.
    8. repec:cup:apsrev:v:55:y:1961:i:04:p:831-842_12 is not listed on IDEAS
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    Cited by:

    1. Pablo Acosta, 2010. "The “flypaper effect” in presence of spatial interdependence: evidence from Argentinean municipalities," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 44(3), pages 453-466, June.
    2. Robert Logan & J. O'Brien, 1989. "Fiscal illusion, budget maximizers, and dynamic equilibrium," Public Choice, Springer, vol. 63(3), pages 221-235, December.
    3. A. M. Suha & P. S. Renjith, 2025. "Federal transfers and sub-national spending in India: an analysis of the stimulatory effect," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 30(1), pages 243-264, January.

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