Centralization vs. Decentralization: A Principal-Agent Analysis

Mariano Tommasi () and Federico Weinschelbaum ()

Journal of Public Economic Theory, 2007, vol. 9, issue 2, pages 369-389

Abstract: The decision to allocate policy jurisdictions to different levels of government is related to a number of trade-offs between the advantages and disadvantages of centralized versus decentralized provision of public services. A trade-off central to many discussions is that between the internalization of externalities under centralization versus an "accountability" advantage of decentralization. In this paper we formalize this trade-off in the context of a class of principal-agent models known as common agency. Copyright 2007 Blackwell Publishing, Inc..

Date: 2007
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