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Toward the More Optimal Provision of Local Public Goods: Internalization of Benefits or Intergovernmental Grants?

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  • Melville L. McMillan

    (University of Wisconsin—Madison)

Abstract

Given the spatial character of many local “public†goods, the traditional recommendations for internalizing benefits–either rejurisdiction or grants–appear insufficient to achieve the optimal levels of output. This analysis indicates that frequently both rejurisdiction and grants are necessary. Contrary to the conventional opinion, the economically optimal constitution may allow spillovers, and such internalization as is required can be more appropriately accomplished not by the extension of boundaries, but by their restriction and the addition of more jurisdictions.

Suggested Citation

  • Melville L. McMillan, 1975. "Toward the More Optimal Provision of Local Public Goods: Internalization of Benefits or Intergovernmental Grants?," Public Finance Review, , vol. 3(3), pages 229-260, July.
    • Handle: RePEc:sae:pubfin:v:3:y:1975:i:3:p:229-260
    DOI: 10.1177/109114217500300302
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    References listed on IDEAS

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