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A Principal-Agent Building Block for the Study of Decentralization and Integration

Author

Listed:
  • Mariano Tommasi

    (Department of Economics, Universidad de San Andres)

  • Federico Weinschelbaum

    (Department of Economics, Universidad de San Andres)

Abstract

The architecture of public decision making in the world is being changed through processes of “economic integration” and of “decentralization”. Some policy decisions are now taken at a higher level (i.e., monetary policy in Europe, trade policy in part of South America), while others are taken by smaller political units “closer to the people” (i.e., health and education policies in many Latin American countries). We provide a building block for the study of such processes, emphasizing the trade-o¤ between the advantages of centralized decision making (internalization of externalities) and those of decentralized decision making (increased principal-agent control by the citizens). We do so within the context of a class of principal-agent models known as common agency.

Suggested Citation

  • Mariano Tommasi & Federico Weinschelbaum, 1999. "A Principal-Agent Building Block for the Study of Decentralization and Integration," Working Papers 20, Universidad de San Andres, Departamento de Economia, revised Nov 1999.
    • Handle: RePEc:sad:wpaper:20
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    File URL: https://webacademicos.udesa.edu.ar/pub/econ/doc20.pdf
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    Cited by:

    1. Deepa Narayan & Lant Pritchett & Soumya Kapoor, 2009. "Moving Out of Poverty : Volume 2. Success from the Bottom Up," World Bank Publications - Books, The World Bank Group, number 11838.
    2. Sanguinetti, Pablo & Tommasi, Mariano, 2004. "Intergovernmental transfers and fiscal behavior insurance versus aggregate discipline," Journal of International Economics, Elsevier, vol. 62(1), pages 149-170, January.
    3. Sebastian Eckardt, 2007. "Political Accountability, Fiscal Conditions, and Local Government Performance – Cross-Sectional Evidence from Indonesia," Working Papers 02-2007, Institute of Local Public Finance.
    4. Pranab Bardhan & Dilip Mookherjee, 2005. "Decentralization, Corruption and Government Accountability: An Overview," Boston University - Department of Economics - The Institute for Economic Development Working Papers Series dp-152, Boston University - Department of Economics.
    5. Juan Luis Gómez-Reino & Santiago Lago-Peñas & Jorge Martinez-Vazquez, 2021. "Evidence on Economies of Scale in Local Public Service Provision: A Meta-Analysis," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper2116, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    6. Raul Barreto, 2003. "A Model of State Infrastructure with Decentralized Public Agents: Theory and Evidence," Centre for International Economic Studies Working Papers 2003-07, University of Adelaide, Centre for International Economic Studies.
    7. Pranab Bardhan, 2002. "Decentralization of Governance and Development," Journal of Economic Perspectives, American Economic Association, vol. 16(4), pages 185-205, Fall.
    8. Juan Luis Gómez-Reino & Jorge Martinez-Vazquez, 2013. "An international perspective on the determinants of local government fragmentation," Chapters, in: Santiago Lago-Peñas & Jorge Martinez-Vazquez (ed.), The Challenge of Local Government Size, chapter 2, pages 8-54, Edward Elgar Publishing.
    9. Conning, Jonathan & Kevane, Michael, 2002. "Community-Based Targeting Mechanisms for Social Safety Nets: A Critical Review," World Development, Elsevier, vol. 30(3), pages 375-394, March.
    10. Roberto Cortes Conde, 2008. "Spanish America Colonial Patterns: The Rio de La Plata," Working Papers 96, Universidad de San Andres, Departamento de Economia, revised Mar 2008.
    11. Susheng Wang & Jun Xiao, 2024. "The hierarchy of public governance: resource allocation versus bureaucratic inefficiency," Review of Economic Design, Springer;Society for Economic Design, vol. 28(2), pages 391-434, June.
    12. Besley, Timothy & Coate, Stephen, 2003. "Centralized versus decentralized provision of local public goods: a political economy approach," Journal of Public Economics, Elsevier, vol. 87(12), pages 2611-2637, December.

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    More about this item

    Keywords

    principal-agent; decentralization; integration;
    All these keywords.

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • H49 - Public Economics - - Publicly Provided Goods - - - Other
    • H79 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Other

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