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Old and New Theories of Fiscal Federalism, Organizational Design Problems, and Tiebout

  • Giampaolo Garzarelli

    (University of Rome, 'La Sapienza')

This work is a contribution to the Second Generation Theory (SGT) of fiscal federalism that studies fiscal federalism through contemporary economic and industrial organization theory. First, it establishes context by introducing the two classic motivations in support of federalism, namely, incentives and knowledge. Second, it succinctly discusses the incentive-based organizational approach of the SGT. Third, it shows that the Tiebout model already embeds an organizational approach, which instead rests on a knowledge motivation. The underlying theme is that the SGT should include both the incentive and knowledge motivations for fiscal decentralization.

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File URL: http://128.118.178.162/eps/pe/papers/0509/0509009.pdf
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Paper provided by EconWPA in its series Public Economics with number 0509009.

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Length: 18 pages
Date of creation: 21 Sep 2005
Date of revision:
Handle: RePEc:wpa:wuwppe:0509009
Note: Type of Document - pdf; pages: 18
Contact details of provider: Web page: http://128.118.178.162

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  1. Yingyi Qian & Barry R. Weingast, 1997. "Federalism as a Commitment to Preserving Market Incentives," Working Papers 97042, Stanford University, Department of Economics.
  2. Seabright, Paul, 1994. "Accountability and Decentralization in Government: An Incomplete Contracts Model," CEPR Discussion Papers 889, C.E.P.R. Discussion Papers.
  3. Oliver Volckart, 2002. "No Utopia: Government Without Territorial Monopoly in Medieval Central Europe," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 158(2), pages 325-, June.
  4. Persson, Torsten & Tabellini, Guido, 1996. "Federal Fiscal Constitutions: Risk Sharing and Moral Hazard," Econometrica, Econometric Society, vol. 64(3), pages 623-46, May.
  5. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64, pages 416.
  6. Mariano Tommasi & Federico Weinschelbaum, 2007. "Centralization vs. Decentralization: A Principal-Agent Analysis," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 9(2), pages 369-389, 04.
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