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Influence Costs in the Provision of Local Public Goods

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  • Besharov, Gregory

Abstract

This paper studies federalism in a "menu auction" or common agency setting where influence costs depend on the heterogeneity of preferences over allowed policies. Though localized provision and uniformity constraints may preclude efficient policies, they reduce influence costs and may enhance welfare. Thus, the much-criticized, commonly-assumed uniformity restriction on central governments finds justification. Localized provision may be optimal even in the presence of spillovers. Higher spillovers from a jurisdiction reduce the welfare of its residents under local provision and have ambiguous effects under centralized provision. Uniformity constraints are better when individuals are mixed; local provision is complementary to sorting.

Suggested Citation

  • Besharov, Gregory, 2001. "Influence Costs in the Provision of Local Public Goods," Working Papers 01-02, Duke University, Department of Economics.
    • Handle: RePEc:duk:dukeec:01-02
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    Cited by:

    1. repec:dau:papers:123456789/4069 is not listed on IDEAS
    2. Fabio Fiorillo & Agnese Sacchi, 2012. "The Political Economy of the Standard Level of Services: The Role of Income Distribution," CESifo Working Paper Series 3696, CESifo.
    3. Gregory Besharov & Ari Zweiman, 2005. "Inefficient Local Regulation of Local Externalities," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 7(3), pages 383-403, August.
    4. Campante, Filipe R. & Ferreira, Francisco H.G., 2007. "Inefficient lobbying, populism and oligarchy," Journal of Public Economics, Elsevier, vol. 91(5-6), pages 993-1021, June.

    More about this item

    JEL classification:

    • H1 - Public Economics - - Structure and Scope of Government
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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