Bulletin n. 2/2008
September 2008
CONTENTS
  • Section A) The theory and practise of the federal states and multi-level systems of government
  • Section B) Global governance and international organizations
  • Section C) Regional integration processes
  • Section D) Federalism as a political idea
    • Koethenbuerger Marko
    Revisiting the “Decentralization Theorem”—On the role of externalities
    in Journal of Urban Economics , Volume 64, Issue 1 ,  2008 ,  116-122
    The “Decentralization Theorem” [Oates, W.E., 1972. Fiscal Federalism. Harcourt Brace Jovanovich, New York] is central to the discussion of fiscal federalism. We revisit the role of consumption spillovers in evaluating the merits of (de)centralization. Unlike the general prediction, a higher degree of spillovers may reduce the difference in utility of centralization and decentralization. The non-monotonicity result relates to the difference in expenditures on public consumption. Provided decentralized choices yield higher levels of public expenditure, a rise in the amount of spillovers allows residents to enjoy larger gains in public consumption (and thereby utility) under decentralization relative to centralization.
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