Think Locally, Act Locally: Spillovers, Spillbacks, and Efficient Decentralized Policymaking

Hikaru Ogawa and David Wildasin

American Economic Review, 2009, vol. 99, issue 4, 1206-17

Abstract: We analyze models with interjurisdictional spillovers among heterogeneous jurisdictions, such as CO2 emissions that affect the global environment. Each jurisdiction's emissions depend upon the local stock of capital, which is interjurisdictionally mobile and subject to local taxation. In important cases, decentralized policy-making leads to efficient resource allocation, even in the complete absence of corrective interventions by higher-level governments or coordination of policy through Coasian bargaining. In particular, even when the preferences and production technologies differ among the agents, the decentralized system can result in globally efficient allocation. (JEL D62, H23, H73, H87, Q58)

JEL-codes: D62 H23 H73 H87 Q58 (search for similar items in EconPapers)
Date: 2009
Note: DOI: 10.1257/aer.99.4.1206
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Citations: View citations in EconPapers (112)

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Related works:
Working Paper: Think Locally, Act Locally: Spillovers, Spillbacks, and Efficient Decentralized Policymaking (2007)
Working Paper: Think Locally, Act Locally: Spillovers, Spillbacks, and Efficient Decentralized Policymaking (2007)
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