Cognition, Incentives, and Public Governance:Laboratory Federalism from the Organizational Viewpoint

Giampaolo Garzarelli

Public Economics from University Library of Munich, Germany

Abstract: The Second Generation Theory (SGT) of fiscal federalism, which draws upon contemporary economic and industrial organization theory, hitherto focuses only on the negative benefits of public decentralization: the potentially superior ability to align perverse incentives vis-à-vis the centralized governance alternative. The SGT neglects the positive benefits of decentralization (mistake-ridden learning, flexibility, and option discovery), although the limitations of organization theory do not justify such neglect. By likening intergovernmental grants to incomplete contracts, this work shows that the SGT can include the laboratory nature of decentralization.

Keywords: Experimentation; incomplete contracts; intergovernmental grants; learning; Second Generation Theory of fiscal federalism. (search for similar items in EconPapers)
JEL-codes: D6 D7 H (search for similar items in EconPapers)
Pages: 31 pages
Date: 2005-12-29
New Economics Papers: this item is included in nep-cbe and nep-pbe
Note: Type of Document - pdf; pages: 31
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://econwpa.ub.uni-muenchen.de/econ-wp/pe/papers/0512/0512013.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwppe:0512013

Access Statistics for this paper

More papers in Public Economics from University Library of Munich, Germany
Bibliographic data for series maintained by EconWPA ( this e-mail address is bad, please contact ).