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Devolution, independence, and the optimal provision of public goods

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  • Stiglitz, J.E.

Abstract

This paper examines whether two regions should remain together within a fiscal federation, or separate, when their inhabitants have different preferences for publicly provided goods. The paper focuses on trade-offs between returns to scale in the provision of the goods, and the scope to tailor provision to the tastes of the inhabitants in each region. A general model is developed that includes, as special cases, both pure public and publicly provided goods, and regional and national public goods. We show that when there is a choice between public investment and consumption goods, there will, in general, be a bias against public consumption goods unless taxing powers are fully devolved. We provide conditions under which independence may be desirable even when the region contemplating independence is relatively small.

Suggested Citation

  • Stiglitz, J.E., 2015. "Devolution, independence, and the optimal provision of public goods," Economics of Transportation, Elsevier, vol. 4(1), pages 82-94.
    • Handle: RePEc:eee:ecotra:v:4:y:2015:i:1:p:82-94
    DOI: 10.1016/j.ecotra.2015.05.001
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    References listed on IDEAS

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    2. Richard POSPISIL, 2017. "Performance audit in public institutions in the Czech Republic," The Audit Financiar journal, Chamber of Financial Auditors of Romania, vol. 15(147), pages 430-430.
    3. Salanié, Bernard, 2015. "Homage to Richard Arnott," Economics of Transportation, Elsevier, vol. 4(1), pages 5-6.
    4. Adolfo Maza & María Hierro, 2022. "Attempting to measure the intensity of opposing feelings in elections: A polarization approach to Catalonia’s independence case," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 39(2), pages 323-344, July.
    5. James W. Mjelde & Rebekka M. Dudensing & Geoffrey Battista & Jonathan Brooks & Maria Carrillo & Blane Counsil & Anil Giri & Man-Keun Kim & V. Dimitra Pyrialakou, 2020. "Rural Transportation Conference Participants’ Opinions and Concerns Pertaining to Transit for Older Adults," SAGE Open, , vol. 10(2), pages 21582440209, May.
    6. Dylan Fitz & Shyam Gouri Suresh, 2021. "Poverty traps across levels of aggregation," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 16(4), pages 909-953, October.

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