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Learning from Decentralised Policy: The Demand Side

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  • Jan Schnellenbach

    () (Department for Public Economics, Marburg University)

Abstract

A popular argument about economic policy under uncertainty states that decentralisation offers the possibility to learn from local or regional policy experiments. We argue that such learning processes are not trivial and do not occur frictionlessly: Voters have an inherent tendency to retain a given stock of policy-related knowledge which was costly to accumulate, so that yardstick competition is improbable to function well particularly for complex issues if representatives' actions are tightly controlled by the electorate. Decentralisation provides improved learning processes compared to unitary systems, but the results we can expect are far from the ideal mechanisms of producing and utilising knowledge often described in the literature.This paper looks at competition in the telecommunication industry.

Suggested Citation

  • Jan Schnellenbach, 2005. "Learning from Decentralised Policy: The Demand Side," JEPS Working Papers 05-001, JEPS.
  • Handle: RePEc:jep:wpaper:05001
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    References listed on IDEAS

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    1. Besley, Timothy & Case, Anne, 1995. "Incumbent Behavior: Vote-Seeking, Tax-Setting, and Yardstick Competition," American Economic Review, American Economic Association, vol. 85(1), pages 25-45, March.
    2. Viktor Vanberg & Wolfgang Kerber, 1994. "Institutional competition among jurisdictions: An evolutionary approach," Constitutional Political Economy, Springer, vol. 5(2), pages 193-219, March.
    3. Federico Revelli, 2001. "Spatial patterns in local taxation: tax mimicking or error mimicking?," Applied Economics, Taylor & Francis Journals, vol. 33(9), pages 1101-1107.
    4. Salmon, Pierre, 1987. "Decentralisation as an Incentive Scheme," Oxford Review of Economic Policy, Oxford University Press, vol. 3(2), pages 24-43, Summer.
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    6. Koleman S. Strumpf, 2002. "Does Government Decentralization Increase Policy Innovation?," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 4(2), pages 207-241, April.
    7. Wolfgang Kerber & Nicole J. Saam, 2001. "Competition As a Test of Hypotheses: Simulation of Knowledge-Generating Market Processes," Journal of Artificial Societies and Social Simulation, Journal of Artificial Societies and Social Simulation, vol. 4(3), pages 1-2.
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    Cited by:

    1. Jan Schnellenbach, 2006. "Tax Morale and the Taming of Leviathan," Constitutional Political Economy, Springer, vol. 17(2), pages 117-132, June.
    2. Thomas Doring & Jan Schnellenbach, 2006. "What do we know about geographical knowledge spillovers and regional growth?: A survey of the literature," Regional Studies, Taylor & Francis Journals, vol. 40(3), pages 375-395.

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    More about this item

    Keywords

    Policy decentralisation; fiscal competition; model uncertainty; collective learning;
    All these keywords.

    JEL classification:

    • H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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