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Decentrqalized Redistribution in a Laboratory Federation

Fiscal federalism is often hailed as an innovation procedure: successful policy experiments in one jurisdiction will, via imitation, spread through the entire system, leading to overall better policy performance. We show that such hopes set in laboratory federalism may be ill-founded. For a standard framework of decentralized redistribution in a common labor market with mobile transfer recipients imitationwith- experimentation will lead to a complete breakdown of the welfare state: zero transfers.

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File URL: http://homepage.univie.ac.at/Papers.Econ/RePEc/vie/viennp/vie1402.pdf
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Paper provided by University of Vienna, Department of Economics in its series Vienna Economics Papers with number 1402.

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Date of creation: Feb 2014
Handle: RePEc:vie:viennp:1402
Contact details of provider: Web page: http://www.univie.ac.at/vwl

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  10. Revelli, Federico & Tovmo, Per, 2007. "Revealed yardstick competition: Local government efficiency patterns in Norway," Journal of Urban Economics, Elsevier, vol. 62(1), pages 121-134, July.
  11. SALMON, Pierre, 1987. "Decentralization as an incentive scheme," Institut des Mathématiques Economiques – Document de travail de l’I.M.E. (1974-1993) 98, Institut des Mathématiques Economiques. LATEC, Laboratoire d'Analyse et des Techniques EConomiques, CNRS, Université de Bourgogne.
  12. Fernando Vega Redondo, 1996. "The evolution of walrasian behavior," Working Papers. Serie AD 1996-05, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
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  20. Tanaka, Yasuhito, 2000. "Stochastically stable states in an oligopoly with differentiated goods: equivalence of price and quantity strategies," Journal of Mathematical Economics, Elsevier, vol. 34(2), pages 235-253, October.
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  22. Ana B. Ania & Andreas Wagener, 2014. "Laboratory Federalism: The Open Method of Coordination (OMC) as an Evolutionary Learning Process," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 16(5), pages 767-795, October.
  23. Robert P. Inman & Daniel L. Rubinfeld, 1997. "Rethinking Federalism," Journal of Economic Perspectives, American Economic Association, vol. 11(4), pages 43-64, Fall.
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  26. Glenn Ellison, 2000. "Basins of Attraction, Long-Run Stochastic Stability, and the Speed of Step-by-Step Evolution," Review of Economic Studies, Oxford University Press, vol. 67(1), pages 17-45.
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