IDEAS home Printed from https://ideas.repec.org/a/eee/soceps/v81y2022ics0038012120307849.html
   My bibliography  Save this article

A centralized directional distance model for efficient and horizontally equitable grants allocation to local governments

Author

Listed:
  • Arocena, Pablo
  • Cabasés, Fermín
  • Pascual, Pedro

Abstract

This paper proposes a directional distance model for efficient resource allocation when there is a centralized decision maker who oversees all units. The model is designed to allocate grants from an upper-tier government to the municipalities under its jurisdiction. Local governments employ the grants together with levied local taxes to provide services to their citizens. The objective of our formulation is to optimize grants allocation across municipalities taking into account efficiency, effectiveness and horizontal fiscal equity criteria. The model easily allows the setting of alternative priorities of the central decision maker, thus permitting quantification of the trade-off between the potential increase in the provision of local services and its associated cost. The model is applied to the allocation of current grants in the autonomous community of Navarre in northern Spain.

Suggested Citation

  • Arocena, Pablo & Cabasés, Fermín & Pascual, Pedro, 2022. "A centralized directional distance model for efficient and horizontally equitable grants allocation to local governments," Socio-Economic Planning Sciences, Elsevier, vol. 81(C).
    • Handle: RePEc:eee:soceps:v:81:y:2022:i:c:s0038012120307849
    DOI: 10.1016/j.seps.2020.100947
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0038012120307849
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.seps.2020.100947?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Solé-Ollé, Albert & Sorribas-Navarro, Pilar, 2008. "The effects of partisan alignment on the allocation of intergovernmental transfers. Differences-in-differences estimates for Spain," Journal of Public Economics, Elsevier, vol. 92(12), pages 2302-2319, December.
    2. Fujii, Hidemichi & Managi, Shunsuke & Matousek, Roman, 2014. "Indian bank efficiency and productivity changes with undesirable outputs: A disaggregated approach," Journal of Banking & Finance, Elsevier, vol. 38(C), pages 41-50.
    3. Francisco J. Arcelus & Pablo Arocena & Ferm�n Cabas�s & Pedro Pascual, 2015. "On the Cost-Efficiency of Service Delivery in Small Municipalities," Regional Studies, Taylor & Francis Journals, vol. 49(9), pages 1469-1480, September.
    4. Boaz Golany & Eran Tamir, 1995. "Evaluating Efficiency-Effectiveness-Equality Trade-Offs: A Data Envelopment Analysis Approach," Management Science, INFORMS, vol. 41(7), pages 1172-1184, July.
    5. Yu, Ming-Miin & Chern, Ching-Chin & Hsiao, Bo, 2013. "Human resource rightsizing using centralized data envelopment analysis: Evidence from Taiwan's Airports," Omega, Elsevier, vol. 41(1), pages 119-130.
    6. Asmild, Mette & Paradi, Joseph C. & Pastor, Jesus T., 2009. "Centralized resource allocation BCC models," Omega, Elsevier, vol. 37(1), pages 40-49, February.
    7. Lozano, S. & Villa, G. & Brännlund, R., 2009. "Centralised reallocation of emission permits using DEA," European Journal of Operational Research, Elsevier, vol. 193(3), pages 752-760, March.
    8. S Lozano & G Villa, 2005. "Centralized DEA models with the possibility of downsizing," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 56(4), pages 357-364, April.
    9. Chen, Po-Chi & Yu, Ming-Miin & Chang, Ching-Cheng & Managi, Shunsuke, 2014. "Non-Radial Directional Performance Measurement with Undesirable Outputs," MPRA Paper 57189, University Library of Munich, Germany.
    10. Sebastián Lozano & Gabriel Villa, 2004. "Centralized Resource Allocation Using Data Envelopment Analysis," Journal of Productivity Analysis, Springer, vol. 22(1), pages 143-161, July.
    11. Wallace E. Oates & Wallace E. Oates, 2004. "An Essay on Fiscal Federalism," Chapters, in: Environmental Policy and Fiscal Federalism, chapter 22, pages 384-414, Edward Elgar Publishing.
    12. Linda Veiga & Maria Pinho, 2007. "The political economy of intergovernmental grants: Evidence from a maturing democracy," Public Choice, Springer, vol. 133(3), pages 457-477, December.
    13. Lei Fang, 2016. "Centralized resource allocation DEA models based on revenue efficiency under limited information," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 67(7), pages 945-952, July.
    14. Pekka Korhonen & Mikko Syrjänen, 2004. "Resource Allocation Based on Efficiency Analysis," Management Science, INFORMS, vol. 50(8), pages 1134-1144, August.
    15. Rajiv D. Banker & Richard C. Morey, 1986. "Efficiency Analysis for Exogenously Fixed Inputs and Outputs," Operations Research, INFORMS, vol. 34(4), pages 513-521, August.
    16. Fang, Lei, 2013. "A generalized DEA model for centralized resource allocation," European Journal of Operational Research, Elsevier, vol. 228(2), pages 405-412.
    17. Lara E., Bernardo & Toro M., Sergio, 2019. "Tactical distribution in local funding: The value of an aligned mayor," European Journal of Political Economy, Elsevier, vol. 56(C), pages 74-89.
    18. Robin Boadway & Anwar Shah, 2007. "Intergovernmental Fiscal Transfers : Principles and Practice," World Bank Publications - Books, The World Bank Group, number 7171.
    19. Beasley, J. E., 2003. "Allocating fixed costs and resources via data envelopment analysis," European Journal of Operational Research, Elsevier, vol. 147(1), pages 198-216, May.
    20. Cecilio Mar-Molinero & Diego Prior & Maria-Manuela Segovia & Fabiola Portillo, 2014. "On centralized resource utilization and its reallocation by using DEA," Annals of Operations Research, Springer, vol. 221(1), pages 273-283, October.
    21. Barros, Carlos Pestana & Managi, Shunsuke & Matousek, Roman, 2012. "The technical efficiency of the Japanese banks: Non-radial directional performance measurement with undesirable output," Omega, Elsevier, vol. 40(1), pages 1-8, January.
    22. Lozano, S. & Villa, G. & Adenso-Díaz, B., 2004. "Centralised target setting for regional recycling operations using DEA," Omega, Elsevier, vol. 32(2), pages 101-110, April.
    23. R. G. Chambers & Y. Chung & R. Färe, 1998. "Profit, Directional Distance Functions, and Nerlovian Efficiency," Journal of Optimization Theory and Applications, Springer, vol. 98(2), pages 351-364, August.
    24. Athanassopoulos, Antreas D., 1995. "Goal programming & data envelopment analysis (GoDEA) for target-based multi-level planning: Allocating central grants to the Greek local authorities," European Journal of Operational Research, Elsevier, vol. 87(3), pages 535-550, December.
    25. Antreas D. Athanassopoulos, 1998. "Decision Support for Target-Based Resource Allocation of Public Services in Multiunit and Multilevel Systems," Management Science, INFORMS, vol. 44(2), pages 173-187, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Amirteimoori, Alireza & Kazemi Matin, Reza & Yadollahi, Amir Hossein, 2024. "Stochastic resource reallocation in two-stage production processes with undesirable outputs: An empirical study on the power industry," Socio-Economic Planning Sciences, Elsevier, vol. 93(C).
    2. Lozano, Sebastián & Contreras, Ignacio, 2022. "Centralised resource allocation using Lexicographic Goal Programming. Application to the Spanish public university system," Socio-Economic Planning Sciences, Elsevier, vol. 84(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Amirteimoori, Alireza & Kazemi Matin, Reza & Yadollahi, Amir Hossein, 2024. "Stochastic resource reallocation in two-stage production processes with undesirable outputs: An empirical study on the power industry," Socio-Economic Planning Sciences, Elsevier, vol. 93(C).
    2. Menghan Chen & Sheng Ang & Lijing Jiang & Feng Yang, 2020. "Centralized resource allocation based on cross-evaluation considering organizational objective and individual preferences," OR Spectrum: Quantitative Approaches in Management, Springer;Gesellschaft für Operations Research e.V., vol. 42(2), pages 529-565, June.
    3. Ane Elixabete Ripoll-Zarraga & Sebastián Lozano, 2020. "A centralised DEA approach to resource reallocation in Spanish airports," Annals of Operations Research, Springer, vol. 288(2), pages 701-732, May.
    4. Adel Hatami-Marbini & Zahra Ghelej Beigi & Hirofumi Fukuyama & Kobra Gholami, 2015. "Modeling Centralized Resources Allocation and Target Setting in Imprecise Data Envelopment Analysis," International Journal of Information Technology & Decision Making (IJITDM), World Scientific Publishing Co. Pte. Ltd., vol. 14(06), pages 1189-1213, November.
    5. Yu, Ming-Miin & Chen, Li-Hsueh, 2016. "Centralized resource allocation with emission resistance in a two-stage production system: Evidence from a Taiwan’s container shipping company," Transportation Research Part A: Policy and Practice, Elsevier, vol. 94(C), pages 650-671.
    6. Feng, Chenpeng & Chu, Feng & Ding, Jingjing & Bi, Gongbing & Liang, Liang, 2015. "Carbon Emissions Abatement (CEA) allocation and compensation schemes based on DEA," Omega, Elsevier, vol. 53(C), pages 78-89.
    7. Feng Li & Qingyuan Zhu & Liang Liang, 2019. "A new data envelopment analysis based approach for fixed cost allocation," Annals of Operations Research, Springer, vol. 274(1), pages 347-372, March.
    8. Fang, Lei, 2015. "Centralized resource allocation based on efficiency analysis for step-by-step improvement paths," Omega, Elsevier, vol. 51(C), pages 24-28.
    9. Jie Wu & Jun-Fei Chu & Liang Liang, 2016. "Target setting and allocation of carbon emissions abatement based on DEA and closest target: an application to 20 APEC economies," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 84(1), pages 279-296, November.
    10. Hien Thu Pham & Antonio Peyrache, 2015. "Industry Inefficiency Measures: A Unifying Approximation Proposition," CEPA Working Papers Series WP102015, School of Economics, University of Queensland, Australia.
    11. Zuoren Sun & Rundong Luo & Dequn Zhou, 2015. "Optimal Path for Controlling Sectoral CO 2 Emissions Among China’s Regions: A Centralized DEA Approach," Sustainability, MDPI, vol. 8(1), pages 1-20, December.
    12. Jie Wu & Qingyuan Zhu & Wade D Cook & Joe Zhu, 2016. "Best cooperative partner selection and input resource reallocation using DEA," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 67(9), pages 1221-1237, September.
    13. Ang, Sheng & Liu, Pei & Yang, Feng, 2020. "Intra-Organizational and inter-organizational resource allocation in two-stage network systems," Omega, Elsevier, vol. 91(C).
    14. Akram Dehnokhalaji & Mojtaba Ghiyasi & Pekka Korhonen, 2017. "Resource allocation based on cost efficiency," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 68(10), pages 1279-1289, October.
    15. Liesiö, Juuso & Andelmin, Juho & Salo, Ahti, 2020. "Efficient allocation of resources to a portfolio of decision making units," European Journal of Operational Research, Elsevier, vol. 286(2), pages 619-636.
    16. Contreras, I. & Lozano, S., 2020. "Allocating additional resources to public universities. A DEA bargaining approach," Socio-Economic Planning Sciences, Elsevier, vol. 71(C).
    17. Tao Ding & Ya Chen & Huaqing Wu & Yuqi Wei, 2018. "Centralized fixed cost and resource allocation considering technology heterogeneity: a DEA approach," Annals of Operations Research, Springer, vol. 268(1), pages 497-511, September.
    18. Yingying Shao & Gongbing Bi & Feng Yang & Qiong Xia, 2018. "Resource allocation for branch network system with considering heterogeneity based on DEA method," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 26(4), pages 1005-1025, December.
    19. Xiong, Xi & Yang, Guo-liang & Zhou, De-qun & Wang, Zi-long, 2022. "How to allocate multi-period research resources? Centralized resource allocation for public universities in China using a parallel DEA-based approach," Socio-Economic Planning Sciences, Elsevier, vol. 82(PB).
    20. S Lozano & G Villa, 2010. "DEA-based pre-merger planning tool," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 61(10), pages 1485-1497, October.

    More about this item

    Keywords

    centralized resource allocation; Efficiency; Horizontal equity; Local governments; Grants;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures

    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:eee:soceps:v:81:y:2022:i:c:s0038012120307849. See general information about how to correct material in RePEc.

    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 bibliographic 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/seps .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.