IDEAS home Printed from https://ideas.repec.org/p/zbw/kondp1/317.html
   My bibliography  Save this paper

Income redistribution in an economic union: Does asymmetric information legitimize centralization?

Author

Listed:
  • Kolmar, Martin

Abstract

In this paper the role of information asymmetries between regions and a centralized authority is analyzed. In a model with inter-regional externalities due to capital mobility and a source-based tax instrument, we first derive conditions for which the optimum can be implemented by an adequately designed institution even with decentralized information about preferences for redistribution. Second we demonstrate that social-policy does not have to be centralized in order to implement the optimum. Decentralization of social policies is compatible with efficiency even when source-based taxes have to be used if decentralized authorities can rely on the enforcement of bilateral contracts.

Suggested Citation

  • Kolmar, Martin, 2002. "Income redistribution in an economic union: Does asymmetric information legitimize centralization?," Discussion Papers, Series I 317, University of Konstanz, Department of Economics.
  • Handle: RePEc:zbw:kondp1:317
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/68939/1/685622649.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Horst Raff & John Wilson, 1997. "Income Redistribution with Well-Informed Local Governments," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 4(4), pages 407-427, November.
    2. Sinn, Hans-Werner, 1990. "Tax harmonization and tax competition in Europe," European Economic Review, Elsevier, vol. 34(2-3), pages 489-504, May.
    3. Dhillon, Amrita & Perroni, Carlo & Scharf, Kimberley A., 1999. "Implementing tax coordination," Journal of Public Economics, Elsevier, vol. 72(2), pages 243-268, May.
    4. Cornes, Richard C. & Silva, Emilson C. D., 2000. "Local Public Goods, Risk Sharing, and Private Information in Federal Systems," Journal of Urban Economics, Elsevier, vol. 47(1), pages 39-60, January.
    5. Myerson, Roger B. & Satterthwaite, Mark A., 1983. "Efficient mechanisms for bilateral trading," Journal of Economic Theory, Elsevier, vol. 29(2), pages 265-281, April.
    6. d'Aspremont, Claude & Gerard-Varet, Louis-Andre, 1979. "Incentives and incomplete information," Journal of Public Economics, Elsevier, vol. 11(1), pages 25-45, February.
    7. David E. Wildasin, 1994. "Income Redistribution and Migration," Canadian Journal of Economics, Canadian Economics Association, vol. 27(3), pages 637-656, August.
    8. Cremer, Helmuth & Pestieau, Pierre, 1996. "Distributive implications of European integration," European Economic Review, Elsevier, vol. 40(3-5), pages 747-757, April.
    9. Wildasin, David E, 1991. "Income Redistribution in a Common Labor Market," American Economic Review, American Economic Association, vol. 81(4), pages 757-774, September.
    10. Wellisch, Dietmar & Wildasin, David E., 1996. "Decentralized income redistribution and immigration," European Economic Review, Elsevier, vol. 40(1), pages 187-217, January.
    11. Bordignon, Massimo & Brusco, Sandro, 2001. "Optimal secession rules," European Economic Review, Elsevier, vol. 45(10), pages 1811-1834, December.
    12. Epple, Dennis & Romer, Thomas, 1991. "Mobility and Redistribution," Journal of Political Economy, University of Chicago Press, vol. 99(4), pages 828-858, August.
    13. Makowski Louis & Mezzetti Claudio, 1994. "Bayesian and Weakly Robust First Best Mechanisms: Characterizations," Journal of Economic Theory, Elsevier, vol. 64(2), pages 500-519, December.
    14. Hellwig, Martin, 1987. "Some recent developments in the theory of competition in markets with adverse selection ," European Economic Review, Elsevier, vol. 31(1-2), pages 319-325.
    15. Helmuth Cremer & Pierre Pestieau, 1997. "Income Redistribution in an Economic Union: The Trade Off Between Inter- and Intra-National Redistribution," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 4(3), pages 325-335, July.
    16. Myers, Gordon M., 1990. "Optimality, free mobility, and the regional authority in a federation," Journal of Public Economics, Elsevier, vol. 43(1), pages 107-121, October.
    17. Groves, Theodore, 1973. "Incentives in Teams," Econometrica, Econometric Society, vol. 41(4), pages 617-631, July.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    fiscal federalism; asymmetric information; decentralization;

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • F15 - International Economics - - Trade - - - Economic Integration
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:kondp1:317. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ZBW - German National Library of Economics). General contact details of provider: http://edirc.repec.org/data/fwkonde.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.