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Distributed Public Economics and Decentralized Public Finance via Network Optimization

Author

Listed:
  • Papastaikoudis, I.
  • Prodromidis, P.
  • Watson, J.
  • Lestas, I.

Abstract

We propose a new approach in public economics in a decentralized finance setting by using distributed optimization techniques for the planning of inter-regional and intra-regional public works/services for multiple regions each one with its own budget, natural and population characteristics. The goal of this study is to provide a toolkit for the planning of vast public works/services in an optimal way across the regions in order to improve the welfare of their respective populations. The proposed optimization approach can assist the government regarding its policy making for the public infrastructure, e.g., in the prioritization of the various public units across regions and also in the optimal geographical allocation of them. We will interpret the problem as a utility maximization problem and we will calculate the Marshallian demand for the public infrastructure.

Suggested Citation

  • Papastaikoudis, I. & Prodromidis, P. & Watson, J. & Lestas, I., 2025. "Distributed Public Economics and Decentralized Public Finance via Network Optimization," Cambridge Working Papers in Economics 2503, Faculty of Economics, University of Cambridge.
    • Handle: RePEc:cam:camdae:2503
    Note: ip352
    as

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    File URL: https://www.econ.cam.ac.uk/research-files/repec/cam/pdf/cwpe2503.pdf
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    More about this item

    Keywords

    Public Economics; Public Finance; Network Optimization;
    All these keywords.

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D30 - Microeconomics - - Distribution - - - General
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • H40 - Public Economics - - Publicly Provided Goods - - - General
    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General

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