An Agency Approach to Local Authorities' Behaviour

Ana Bravo () and Antonio Luis Silvestre ()

ERSA conference papers from European Regional Science Association

Abstract: This paper aims at presenting a simple model of local decision-making based on the hypothesis of monopoly power on the part of local governments. It adds the contribution of the principal-agent theory by assuming that: (a) monopolistic behavior is constrained by voters’ efforts to monitor the outcomes of policies; (b) local governments’ policies affect local property values. Given those assumptions, the degree of capitalization of property taxes is shown to determine the incentive for voters’ control over policies’ outcomes.

New Economics Papers: this item is included in nep-geo
Date: 2006-08

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Persistent link: http://EconPapers.repec.org/RePEc:wiw:wiwrsa:ersa06p898

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