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The welfare costs of national standards: a contribution to the debate on the outcomes of de/centralization

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  • Brosio, Giorgio
  • Zanola, Roberto

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Abstract

This paper analyzes the welfare losses deriving from centralized, uniform levels of public provision of good and services deriving from standards set up by a given level of government. The aim of the paper is to contribute to the growing literature on the e?ective outcomes of decentralization by looking at the other side of the coin, namely at the impact of centralized provision. It develops a simple theoretical model and tests it with reference to public health care provision in Italy. The evidence shows that, while levels of satisfaction increase with income, which is a standard result of the theory, they are lower in the poorer regions where, due to the standards, the share of income absorbed by health care is substantially higher than in the richer regions.

Suggested Citation

  • Brosio, Giorgio & Zanola, Roberto, 2008. "The welfare costs of national standards: a contribution to the debate on the outcomes of de/centralization," POLIS Working Papers 113, Institute of Public Policy and Public Choice - POLIS.
  • Handle: RePEc:uca:ucapdv:113
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    File URL: http://polis.unipmn.it/pubbl/RePEc/uca/ucapdv/zanola125.pdf
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    References listed on IDEAS

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    1. Barankay, Iwan & Lockwood, Ben, 2007. "Decentralization and the productive efficiency of government: Evidence from Swiss cantons," Journal of Public Economics, Elsevier, vol. 91(5-6), pages 1197-1218, June.
    2. Andrés Rodríguez-Pose & Adala Bwire, 2004. "The economic (in)efficiency of devolution," Environment and Planning A, Pion Ltd, London, vol. 36(11), pages 1907-1928, November.
    3. Koleman S. Strumpf & Felix Oberholzer-Gee, 2002. "Endogenous Policy Decentralization: Testing the Central Tenet of Economic Federalism," Journal of Political Economy, University of Chicago Press, vol. 110(1), pages 1-36, February.
    4. Epple, Dennis & Romano, Richard E, 1996. "Public Provision of Private Goods," Journal of Political Economy, University of Chicago Press, vol. 104(1), pages 57-84, February.
    5. Farasat A. S. Bokhari & Yunwei Gai & Pablo Gottret, 2007. "Government health expenditures and health outcomes," Health Economics, John Wiley & Sons, Ltd., vol. 16(3), pages 257-273.
    6. Thornton, John, 2007. "Fiscal decentralization and economic growth reconsidered," Journal of Urban Economics, Elsevier, vol. 61(1), pages 64-70, January.
    7. Levaggi, Rosella & Zanola, Roberto, 2003. "Flypaper Effect and Sluggishness: Evidence from Regional Health Expenditure in Italy," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 10(5), pages 535-547, September.
    8. Cremer, Jacques & Palfrey, Thomas R., 2006. "An equilibrium voting model of federal standards with externalities," Journal of Public Economics, Elsevier, vol. 90(10-11), pages 2091-2106, November.
    9. Ben Lockwood, 2004. "Decentralization via Federal and Unitary Referenda," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 6(1), pages 79-108, February.
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    Cited by:

    1. Privileggi, Fabio, 2008. "On the transition dynamics in endogenous recombinant growth models," POLIS Working Papers 120, Institute of Public Policy and Public Choice - POLIS.
    2. Bondonio, Daniele, 2009. "Impact identification strategies for evaluating business incentive programs," POLIS Working Papers 129, Institute of Public Policy and Public Choice - POLIS.
    3. Piero Cavaleri & Michael Keren & Giovanni B. Ramello & Vittorio Valli, 2009. "Publishing an E-Journal on a Shoe String: Is It a Sustainable Project?," Economic Analysis and Policy, Elsevier, vol. 39(1), pages 89-101, March.
    4. Orso, Cristina Elisa, 2009. "Formal and informal sectors: Interactions between moneylenders and traditional banks in the rural Indian credit market," POLIS Working Papers 135, Institute of Public Policy and Public Choice - POLIS.
    5. Giuranno, Michele, 2009. "The logic of party coalitions with political activism and public financing," POLIS Working Papers 134, Institute of Public Policy and Public Choice - POLIS.

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