Public Good Provision in a Federalist Country: Tiebout Competition, Fiscal Equalization, and Incentives for Efficiency in Switzerland

Philippe Widmer () and Peter Zweifel ()
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Peter Zweifel: Socioeconomic Institute, University of Zurich

No 804, SOI - Working Papers from Socioeconomic Institute - University of Zurich

Abstract: The purpose of this paper is twofold. First, it measures the efficiency in the provision of public goods by local jurisdictions applying Data Envelopment Analysis (DEA). Second, it relates ef- ficiency scores to a fiscal equalization scheme designed to mitigate the negative consequences of Tiebout competition. The data come from the 26 cantons of Switzerland (2000-2004), a country characterized by marked federalism. Results show the equalization scheme to indeed have a negative influence on performance, resulting in an efficiency-equity trade-off (Stiglitz, 1988). However, substitution of earmarked payments by lump-sum payments as part of the 2008 reform is likely to enhance cantonal performance.

Keywords: DEA; efficiency measurement; federalism; fiscal equalization; public finance; Switzerland; Tiebout competition (search for similar items in EconPapers)
JEL-codes: C14 C67 H11 H72 H83 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2008-04, Revised 2010-12
New Economics Papers: this item is included in nep-hap, nep-pbe and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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https://www.zora.uzh.ch/id/eprint/51781/1/wp0804.pdf revised version, 2010 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:soz:wpaper:0804

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