The decentralization tradeoff for complementary spillovers
We examine a symmetric two-district setting with spillovers of local public spending where a spill-in from the foreign spending is not a substitute, but a complement to domestic spending. Specifically, we assume production of two district-specific public goods out of two complementary district-specific inputs. We compare equilibria in non-cooperative decentralization and cooperative centralization for different spillovers, complementarities and cost-division rules, and control for the effects of strategic delegation and the feasibility of voluntary contributions to the input in the foreign district. We find that centralization welfare-dominates decentralization in most institutional settings and for a wide range of parameters, yet we can also identify necessary and sufficient conditions for decentralization to welfare-dominate centralization. The setup features three novelties: In the absence of transfers, welfare in decentralization increases in spillovers, strategic delegation in decentralization improves welfare, and centralized provision may be non-monotonic in spillovers.
(This abstract was borrowed from another version of this item.)
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.
Volume (Year): 16 (2012)
Issue (Month): 1 (March)
|Contact details of provider:|| Web page: http://link.springer.de/link/service/journals/10058/index.htm|
|Order Information:||Web: http://link.springer.de/orders.htm|
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.:
- Feidler, Janos & Staal, Klaas, 2008. "Centralized and decentralized provision of public goods," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 241, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
- Robert A.J. Dur & Hein J. Roelfsema, 2002.
"Why does Centralisation fail to internalise Policy Externalities?,"
Tinbergen Institute Discussion Papers
02-056/3, Tinbergen Institute, revised 11 Nov 2003.
- Robert Dur & Hein Roelfsema, 2005. "Why does centralisation fail to internalise policy externalities?," Public Choice, Springer, vol. 122(3), pages 395-416, March.
- R Dur & H.J. Roelfsema, 2004. "Why Does Centralisation Fail to Internalise Policy Externalities?," Working Papers 04-09, Utrecht School of Economics.
- Roelfsema, Hein, 2007.
"Strategic delegation of environmental policy making,"
Journal of Environmental Economics and Management,
Elsevier, vol. 53(2), pages 270-275, March.
- H.J. Roelfsema, 2004. "Strategic Delegation of Environmental Policy Making," Working Papers 04-11, Utrecht School of Economics.
- Levaggi, Rosella, 2010.
"From local to global public goods: How should externalities be represented?,"
Elsevier, vol. 27(5), pages 1040-1042, September.
- Rosella Levaggi, 2009. "From local to global public goods: how should externalities be represented?," Working Papers 0903, University of Brescia, Department of Economics.
- Loeper, Antoine, 2011. "Coordination in heterogeneous federal systems," Journal of Public Economics, Elsevier, vol. 95(7-8), pages 900-912, August.
- Debraj Ray & Jean-Marie Baland & Olivier Dagnelie, 2007.
"Inequality and Inefficiency in Joint Projects,"
- Giuranno, Michele G., 2010. "Pooling sovereignty under the subsidiary principle," European Journal of Political Economy, Elsevier, vol. 26(1), pages 125-136, March.
- Bloch, Francis & Zenginobuz, Unal, 2004.
"The Effect of Spillovers on the Provision of Local Public Goods,"
186, University Library of Munich, Germany, revised 05 Oct 2006.
- Francis Bloch & Unal Zenginobuz, 2007. "The effect of spillovers on the provision of local public goods," Review of Economic Design, Springer, vol. 11(3), pages 199-216, November.
- Ben Lockwood, 2008.
"Voting, Lobbying, And The Decentralization Theorem,"
Economics and Politics,
Wiley Blackwell, vol. 20(3), pages 416-431, November.
- Ben Lockwood, 2007. "Voting, Lobbying and the Decentralization Theorem," Economics Working Papers ECO2007/06, European University Institute.
- Benjamin Lockwood, 2007. "Voting, Lobbying, and the Decentralization Theorem," CESifo Working Paper Series 2117, CESifo Group Munich.
- Lockwood, Ben, 2007. "Voting, Lobbying, and the Decentralization Theorem," The Warwick Economics Research Paper Series (TWERPS) 798, University of Warwick, Department of Economics.
- Cornes, Richard & Hartley, Roger, 2007.
"Weak links, good shots and other public good games: Building on BBV,"
Journal of Public Economics,
Elsevier, vol. 91(9), pages 1684-1707, September.
- Richard Cornes & Roger Hartley, 2006. "Weak Links, Good Shots and other PublicGood Games: Building on BBV," The School of Economics Discussion Paper Series 0624, Economics, The University of Manchester.
- Richard Cornes & Roger Hartley, . "Weak Links, Good Shots And Other Public Good Games: Building On Bbv," Discussion Papers 06/09, University of Nottingham, School of Economics.
- Bård Harstad, 2007. "Harmonization and Side Payments in Political Cooperation," American Economic Review, American Economic Association, vol. 97(3), pages 871-889, June.
- Vicary, Simon & Sandler, Todd, 2002. "Weakest-link public goods: Giving in-kind or transferring money," European Economic Review, Elsevier, vol. 46(8), pages 1501-1520, September.
- Segendorff, Bjorn, 1998. "Delegation and Threat in Bargaining," Games and Economic Behavior, Elsevier, vol. 23(2), pages 266-283, May.
- Michele Ruta, 2010. "Lobbying and (de)centralization," Public Choice, Springer, vol. 144(1), pages 275-291, July.
- Loeper, Antoine, 2011. "Coordination in heterogeneous federal systems," Journal of Public Economics, Elsevier, vol. 95(7), pages 900-912.
- Jan Schnellenbach & Lars Feld & Christoph schaltegger, 2007.
"The Impact of Referendums on the Centralisation of Public Goods Provision: A Political Economy Approach,"
0440, University of Heidelberg, Department of Economics, revised May 2007.
- Jan Schnellenbach & Lars Feld & Christoph Schaltegger, 2010. "The impact of referendums on the centralisation of public goods provision: a political economy approach," Economics of Governance, Springer, vol. 11(1), pages 3-26, February.
- Jan Schnellenbach & Lars P. Feld & Christoph A. Schaltegger, 2006. "The Impact of Referendums on the Centralisation of Public Goods Provision: A Political Economy Approach," CESifo Working Paper Series 1803, CESifo Group Munich.
- Koethenbuerger, Marko, 2008.
"Revisiting the "Decentralization Theorem"--On the role of externalities,"
Journal of Urban Economics,
Elsevier, vol. 64(1), pages 116-122, July.
- Marko Köthenbürger, 2007. "Revisiting the “Decentralization Theorem” – On the Role of Externalities," CESifo Working Paper Series 2128, CESifo Group Munich.
- Martin Gregor, 2011. "Tradeoffs of foreign assistance for the weakest-link global public goods," International Tax and Public Finance, Springer, vol. 18(2), pages 233-251, April.
- Cheikbossian, Guillaume, 2008. "Rent-seeking, spillovers and the benefits of decentralization," Journal of Urban Economics, Elsevier, vol. 63(1), pages 217-228, January.
- Bergstrom, Theodore C & Cornes, Richard C, 1983. "Independence of Allocative Efficiency from Distribution in the Theory of Public Goods," Econometrica, Econometric Society, vol. 51(6), pages 1753-65, November.
When requesting a correction, please mention this item's handle: RePEc:spr:reecde:v:16:y:2012:i:1:p:41-69. 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: (Sonal Shukla)or (Christopher F Baum)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.