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Heterogeneity and the Provision of a Public Good in Leading and Lagging Regions

Author

Listed:
  • Batabyal, Amitrajeet
  • Yoo, Seung Jick

Abstract

The literature on leading and lagging regions has paid scant attention to how heterogeneity between the two regions impacts the provision of a public good. Given this lacuna, our contribution is to construct a game-theoretic model of an aggregate economy consisting of a leading and a lagging region and to then analyze this model. We show how two kinds of heterogeneity affect the provision of a public good such as higher education. In addition, we focus on decentralized and centralized public good provision and comment on the resulting welfare implications. We obtain two key conclusions. First, under decentralization, there exist several situations in which it is optimal for only one region to provide the public good. Second, under centralization, this exclusive provision is not optimal but the amount of the public good provided can be larger or smaller than the amount provided under decentralization. Our research tells policymakers that population size and values differences between the two regions and the use of majority voting are key factors to consider when pondering the optimal provision of a public good.

Suggested Citation

  • Batabyal, Amitrajeet & Yoo, Seung Jick, 2019. "Heterogeneity and the Provision of a Public Good in Leading and Lagging Regions," MPRA Paper 96812, University Library of Munich, Germany, revised 15 Sep 2019.
  • Handle: RePEc:pra:mprapa:96812
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    File URL: https://mpra.ub.uni-muenchen.de/96812/1/MPRA_paper_96812.pdf
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    References listed on IDEAS

    as
    1. Amit Batabyal & Peter Nijkamp, 2014. "Technology, Learning, and Long Run Economic Growth in Leading and Lagging Regions," ERSA conference papers ersa14p893, European Regional Science Association.
    2. Amitrajeet A. BATABYAL, 2018. "Note On Local Public Good Induced Spillovers Between A Leading And A Lagging Region," Regional Science Inquiry, Hellenic Association of Regional Scientists, vol. 0(2), pages 11-16, July.
    3. repec:spr:apjors:v:3:y:2019:i:3:d:10.1007_s41685-019-00118-7 is not listed on IDEAS
    4. repec:bla:growch:v:50:y:2019:i:1:p:4-37 is not listed on IDEAS
    5. Klaus Desmet & Ignacio Ortuño Ortín, 2007. "Rational Underdevelopment," Scandinavian Journal of Economics, Wiley Blackwell, vol. 109(1), pages 1-24, March.
    6. Dawid, H. & Harting, P. & Neugart, M., 2014. "Economic convergence: Policy implications from a heterogeneous agent model," Journal of Economic Dynamics and Control, Elsevier, vol. 44(C), pages 54-80.
    7. Andrés Rodríguez‐Pose & Callum Wilkie, 2019. "Innovating in less developed regions: What drives patenting in the lagging regions of Europe and North America," Growth and Change, Wiley Blackwell, vol. 50(1), pages 4-37, March.
    8. Batabyal, Amitrajeet & Nijkamp, Peter, 2014. "Some properties of the technology gap between leading and lagging regions," MPRA Paper 71596, University Library of Munich, Germany.
    9. repec:eee:tefoso:v:147:y:2019:i:c:p:216-220 is not listed on IDEAS
    10. Sjak Smulders, 2004. "International capital market integration: Implications for convergence, growth, and welfare," International Economics and Economic Policy, Springer, vol. 1(2), pages 173-194, January.
    11. Amitrajeet A. Batabyal & Karima Kourtit & Peter Nijkamp, 2019. "New Technological Knowledge, Rural and Urban Agriculture, and Steady State Economic Growth," Networks and Spatial Economics, Springer, vol. 19(3), pages 717-729, September.
    12. Amitrajeet A. Batabyal & Peter Nijkamp, 2019. "The magnification of a lagging region’s initial economic disadvantages on the balanced growth path," Asia-Pacific Journal of Regional Science, Springer, vol. 3(3), pages 719-730, October.
    13. Andres Rodriguez-Pose & Riccardo regstdcenzi, 2008. "Research and Development, Spillovers, Innovation Systems, and the Genesis of Regional Growth in Europe," Regional Studies, Taylor & Francis Journals, vol. 42(1), pages 51-67.
    14. repec:taf:regstd:v:51:y:2017:i:7:p:982-993 is not listed on IDEAS
    15. Batabyal, Amitrajeet A. & Beladi, Hamid, 2019. "The optimal provision of information and communication technologies in smart cities," Technological Forecasting and Social Change, Elsevier, vol. 147(C), pages 216-220.
    16. John Goddard & Douglas Robertson & Paul Vallance, 2012. "Universities, Technology and Innovation Centres and regional development: the case of the North-East of England," Cambridge Journal of Economics, Oxford University Press, vol. 36(3), pages 609-627.
    17. Cornes, Richard & Sandler, Todd, 1985. "The Simple Analytics of Pure Public Good Provision," Economica, London School of Economics and Political Science, vol. 52(205), pages 103-116, February.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Centralization; Decentralization; Lagging Region; Leading Region; Public Good;

    JEL classification:

    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies

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