Economics at your fingertips  

Public Good Mix in a Federation with Incomplete Information

Richard Cornes and Emilson Silva ()

Journal of Public Economic Theory, 2003, vol. 5, issue 2, 381-397

Abstract: We analyze a model of resource allocation in a federal system in which the center transfers real resources between member states. The center is assumed to be unable to observe the precise value of the cost differences across jurisdictions that motivate the transfers. Moreover, the center cannot observe the output levels of the individual local public goods provided by the jurisdictions, but must condition its transfers on a coarse aggregate of expenditures on public goods. We find that when the jurisdiction with private information realizes a high unit cost, it is generally worthwhile for the center to allow it a level of expenditure on public goods that differs from the "first best" level. However, whether that level is higher or lower than its first best level depends on the magnitudes of demand parameters for the local public good. Copyright 2003 Blackwell Publishing Inc..

Date: 2003
References: Add references at CitEc
Citations: View citations in EconPapers (9) Track citations by RSS feed

Downloads: (external link) ... &year=2003&part=null link to full text (text/html)
Access to full text is restricted to subscribers.

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:

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=1097-3923

Access Statistics for this article

Journal of Public Economic Theory is currently edited by Rabah Amir, Gareth Myles and Myrna Wooders

More articles in Journal of Public Economic Theory from Association for Public Economic Theory Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().

Page updated 2020-08-12
Handle: RePEc:bla:jpbect:v:5:y:2003:i:2:p:381-397