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Decentralising Public Goods Production

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Abstract

Decentralised decisions, to a bureau with a given budget, about the production of public goods is analysed within a general equilibrium model with a representative agent and no pure profits. It is shown that decentralisation (i) does not necessarily imply aggregate production effciency and (ii) need not be optimal even if all public goods are neutral. Also, cost benefit criteria are derived and the marginal cost of public funds is characterised.

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  • Lundholm, Michael, 2004. "Decentralising Public Goods Production," Research Papers in Economics 2004:6, Stockholm University, Department of Economics.
    • Handle: RePEc:hhs:sunrpe:2004_0006
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    Cited by:

    1. Andersson, Henrik & Hultkrantz, Lars & Lindberg, Gunnar & Nilsson, Jan-Eric, 2017. "The role of economic analysis for investment priorities in Sweden’s transport sector," Working papers in Transport Economics 2017:12, CTS - Centre for Transport Studies Stockholm (KTH and VTI), revised 23 May 2018.
    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. Boriss Siliverstovs & Ulrich Thiessen & Caroline Elliott, 2015. "Incentive effects of fiscal federalism: Evidence for France," Cogent Economics & Finance, Taylor & Francis Journals, vol. 3(1), pages 1017949-101, December.
    4. Sacchi, Agnese & Salotti, Simone, 2014. "The asymmetric nature of fiscal decentralization: theory and practice," MPRA Paper 54506, University Library of Munich, Germany.

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    More about this item

    Keywords

    Cost benefit criteria; marginal cost of public funds; production effciency; delegation; decentralisation.;
    All these keywords.

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate

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