Bulletin n. 3/2007 | ||
December 2007 | ||
Cheikbossian Guillaume |
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Rent-seeking, spillovers and the benefits of decentralization | ||
in Journal of Urban Economics , Volume 63, Issue 1 , 2008 , 217-228 | ||
In the presence of spillovers, decentralized provision of local public goods may lead to a higher surplus than centralized provision even though localities have identical preferences. Indeed, free-riding costs associated to decentralization can be lower than the costs of rent-seeking and influence activities under centralization. Actually, centralization yields a higher level of regional surplus only if both the spillover effect from local public spending is sufficiently large and the elasticity of the influence function is sufficiently small. | ||