IDEAS home Printed from https://ideas.repec.org/a/sae/pubfin/v5y1977i1p23-39.html
   My bibliography  Save this article

Compensation With Induced Factor Movements in a Simple General Equilibrium Model

Author

Listed:
  • Paul S. Kochanowski

    (Indiana University-South Bend)

  • Saul Pleeter

    (University of Cincinnati)

Abstract

Interjurisdictional compensation can provide an effective method of achieving an optimal provision of public goods in an independent system of local governments, only if all the major side effects of public goods are included in its computation. Previous studies have suggested compensation levels calculated solely on spillins and spillouts of public goods, but in this framework the provision of public goods may induce migration of productive inputs. To incorporate potential movement of factors of production, we recast the local government expenditures problem in a simple general equilibrium framework and estimate the impact of migration on the suggested compensation level. We show that, within reasonable ranges of parameter values of our model, compensation based entirely on output externalities substantially understates the level necessary to achieve an allocatively efficient provision of public goods.

Suggested Citation

  • Paul S. Kochanowski & Saul Pleeter, 1977. "Compensation With Induced Factor Movements in a Simple General Equilibrium Model," Public Finance Review, , vol. 5(1), pages 23-39, January.
    • Handle: RePEc:sae:pubfin:v:5:y:1977:i:1:p:23-39
    DOI: 10.1177/109114217700500103
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/109114217700500103
    Download Restriction: no
    File URL: https://libkey.io/10.1177/109114217700500103?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
    ---><---

    References listed on IDEAS

    as
    1. Harry G. Johnson & Peter Mieszkowski, 1970. "The Effects of Unionization on the Distribution of Income: A General Equilibrium Approach," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 84(4), pages 539-561.
    2. Alan Williams, 1966. "The Optimal Provision of Public Goods in a System of Local Government," Journal of Political Economy, University of Chicago Press, vol. 74(1), pages 18-33.
    3. Harberger, Arnold C, 1971. "Three Basic Postulates for Applied Welfare Economics: An Interpretive Essay," Journal of Economic Literature, American Economic Association, vol. 9(3), pages 785-797, September.
    4. Pauly, Mark V, 1970. "Optimality, 'Public' Goods, and Local Governments: A General Theoretical Analysis," Journal of Political Economy, University of Chicago Press, vol. 78(3), pages 572-585, May-June.
    5. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64(5), pages 416-416.
    6. Connolly, Michael, 1970. "Public Goods, Externalities, and International Relations," Journal of Political Economy, University of Chicago Press, vol. 78(2), pages 279-290, March-Apr.
    7. Peter M. Mieszkowski, 1966. "The Comparative Efficiency of Tariffs and Other Tax-Subsidy Schemes as a Means of Obtaining Revenue or Protecting Domestic Production," Journal of Political Economy, University of Chicago Press, vol. 74(6), pages 587-587.
    Full references (including those not matched with items on IDEAS)

    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. Andrew M. Isserman, 1976. "Interjurisdictional Spillovers, Political Fragmentation and the Level of Local Public Services: A Re-Examination," Urban Studies, Urban Studies Journal Limited, vol. 13(1), pages 1-12, February.
    2. Brueckner, Jan K. & Saavedra, Luz A., 2001. "Do Local Governments Engage in Strategic Property-Tax Competition?," National Tax Journal, National Tax Association;National Tax Journal, vol. 54(2), pages 203-230, June.
    3. C.D. Foster, 1972. "Public Finance Aspects of National Settlement Patterns," Urban Studies, Urban Studies Journal Limited, vol. 9(1), pages 79-97, February.
    4. Luz Amparo Saavedra, 2000. "Do Local Governments Engage in Strategic Property- Tax competition?," Borradores de Economia 139, Banco de la Republica de Colombia.
    5. Miriam Hortas-Rico & Vicente Rios, 2020. "Is there an optimal size for local governments? A spatial panel data model approach," Regional Studies, Taylor & Francis Journals, vol. 54(7), pages 958-973, July.
    6. Stehn, Jürgen, 1993. "Theorie des fiskalischen Föderalismus: Ein Referenzmaßstab zur Beurteilung der Beschlüsse von Maastricht," Open Access Publications from Kiel Institute for the World Economy 1898, Kiel Institute for the World Economy (IfW Kiel).
    7. Holzmann, Carolin & von Schwerin, Axel, 2015. "Economic integration and interdependence of tax policy," FAU Discussion Papers in Economics 14/2015, Friedrich-Alexander University Erlangen-Nuremberg, Institute for Economics.
    8. Thomas Lemieux, 1993. "Unions and Wage Inequality in Canada and the United States," NBER Chapters, in: Small Differences That Matter: Labor Markets and Income Maintenance in Canada and the United States, pages 69-108, National Bureau of Economic Research, Inc.
    9. Berkowitz, Daniel, 1997. "Regional income and secession: Center-periphery relations in emerging market economies," Regional Science and Urban Economics, Elsevier, vol. 27(1), pages 17-45, February.
    10. Hitzhusen, Frederick J., 1973. "Some Measurement Criteria For Community Service Output And Costs: The Case Of Fire Protection In Texas," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 5(1), pages 1-9, July.
    11. Keisuke Kawachi & Hikaru Ogawa, 2006. "Further Analysis on Public-Good Provision in a Repeated-Game Setting," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 62(3), pages 339-352, September.
    12. Fitjar, Rune Dahl, 2019. "2019/01 Merging city and suburban governments: A public choice perspective on the Norwegian local government reform," UiS Working Papers in Economics and Finance 2019/1, University of Stavanger.
    13. Le cas de deux régions Suisses & Claude JEANRENAUD, 1980. "L'Offre De Services Publics À Effets Externes Géographiques Dans Les Regions Urbaines," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 51(1-2), pages 149-169, 01-06.
    14. Sayaka Yakita, 2011. "Fiscal decentralization, migration and economic growth," Regional Science Policy & Practice, Wiley Blackwell, vol. 3(4), pages 381-399, November.
    15. Ted Bergstrom & Judy Roberts & Dan Rubinfeld & Perry Shapiro, 1988. "A Test for Efficiency in the Supply of Local Public Education," Papers _036, University of Michigan, Department of Economics.
    16. Hayes, Kathy J & Razzolini, Laura & Ross, Leola B, 1998. "Bureaucratic Choice and Nonoptimal Provision of Public Goods: Theory and Evidence," Public Choice, Springer, vol. 94(1-2), pages 1-20, January.
    17. Graham Crampton, 1996. "Local Government Structure and Urban Residential Location," Urban Studies, Urban Studies Journal Limited, vol. 33(7), pages 1061-1076, August.
    18. Sandler, Todd & Tschirhart, John T, 1980. "The Economic Theory of Clubs: An Evaluative Survey," Journal of Economic Literature, American Economic Association, vol. 18(4), pages 1481-1521, December.
    19. Meeyoung Lamothe & Scott Lamothe, 2015. "Exploring the Determinants of Local Service Termination," Social Science Quarterly, Southwestern Social Science Association, vol. 96(5), pages 1453-1474, November.
    20. Dixit, Avinash & Londregan, John, 1998. "Fiscal federalism and redistributive politics," Journal of Public Economics, Elsevier, vol. 68(2), pages 153-180, May.

    More about this item

    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:sae:pubfin:v:5:y:1977:i:1:p:23-39. 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: SAGE Publications (email available below). General contact details of provider: .

    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.