Detail publikace

The Decentralization Tradeoff for Complementary Spillovers

Autor: doc. PhDr. Martin Gregor Ph.D.,
PhDr. Lenka Šťastná Ph.D.,
Typ: IES Working Papers
Rok: 2011
Číslo: 13
Publikováno v: IES Working Papers 13/2011
Místo vydání: Prague
Klíčová slova: Spillover, Spill-in, Strategic complementarity, Decentralization theorem
JEL kódy: H41; H73; H77
Citace: Gregor, M., Šťastná, L. (2011). “The Decentralization Tradeoff for Complementary Spillovers” IES Working Paper 13/2011. IES FSV. Charles University.
Abstrakt: We examine a symmetric two-district setting with spillovers of local public spending where a spill-in from the foreign spending is not a substitute, but a complement to domestic spending. Specifically, we assume production of two district-specific public goods out of two complementary district-specific inputs. We compare equilibria in non-cooperative decentralization and cooperative centralization for different spillovers, complementarities and cost-division rules, and control for the effects of strategic delegation and the feasibility of voluntary contributions to the input in the foreign district. We find that centralization welfare-dominates decentralization in most institutional settings and for a wide range of parameters, yet we can also identify necessary and sufficient conditions for decentralization to welfare-dominate centralization. The setup features three novelties: In the absence of transfers, welfare in decentralization increases in spillovers, strategic delegation in decentralization improves welfare, and centralized provision may be non-monotonic in spillovers.
Ke stažení: WP 2011_13_Gregor, Stastna


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