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Externalities vs Internalities: A Theory of Political Integration

Author

Listed:
  • Ellingsen, Tore

    () (Dept. of Economics, Stockholm School of Economics)

Abstract

Decentralized government lead to inter-regional externalities. Whereas an integratedjurisdiction solves the externality problem, centralized government entails other costs - in particular a neglect for minority interests. The paper models formally the trade-off between these two forces in determining the optimum as well as the equilibrium design of jurisdictions. Both the relative size of regions and the distribution of tastes are shown to be important parameters of the problem.

Suggested Citation

  • Ellingsen, Tore, 1995. "Externalities vs Internalities: A Theory of Political Integration," SSE/EFI Working Paper Series in Economics and Finance 63, Stockholm School of Economics.
  • Handle: RePEc:hhs:hastef:0063
    as

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    More about this item

    Keywords

    Jurisdictions; integration; centralization; public goods; the State;

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects

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