Vertically Summing Public Good Demand Curves: An Empirical Comparison of Economic versus Political Jurisdictions
Fiscal equivalence for efficient provision of a public good requires perfect correspondence between political and economic jurisdictions. However, the spatial extent of the economic jurisdiction is an empirical question. Drawing on four survey-based valuation studies, we measure the "relative public good benefit gradient" as a function of residential location from six natural resource public goods. The results indicate commonly used state political jurisdictions reflect an average of 13% of total benefits in the economic jurisdiction, although with a logarithmic form for distance the upper confidence interval of state benefits can include 100% for some species.
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