2005-03-01
Why does centralisation fail to internalise policy externalities?
Publication
Publication
Public Choice , Volume 122 - Issue 3-4 p. 395- 416
We provide an explanation why centralisation of political decision making results in overspending in some policy domains, whereas too low spending persists in others. We study a model in which delegates from jurisdictions bargain over local public goods provision. If all of the costs of public goods are shared through a common budget, policy makers delegate bargaining to 'public good lovers', resulting in overprovision of public goods. If a sufficiently large part of the costs can not be shared, underprovision persists because policy makers delegate bargaining to 'conservatives'. We derive financing rules that eliminate the incentives for strategic delegation.
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doi.org/10.1007/s11127-005-5290-6, hdl.handle.net/1765/76258 | |
Public Choice | |
Organisation | Erasmus School of Economics |
Dur, R., & Roelfsema, H. (2005). Why does centralisation fail to internalise policy externalities?. Public Choice, 122(3-4), 395–416. doi:10.1007/s11127-005-5290-6 |