The hierarchy of public governance: resource allocation versus bureaucratic inefficiency

Susheng Wang () and Jun Xiao
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Susheng Wang: Shanghai University
Jun Xiao: University of Melbourne

Review of Economic Design, 2024, vol. 28, issue 2, No 6, 434 pages

Abstract: Abstract Should a social program be run at a higher or lower level of government? We consider a government-run program supplying a private good to consumers. We focus on a tradeoff between the advantage of a high level of government in resource allocation and its disadvantage in consumer information. We look into the effect of differences in income levels, marginal costs, and preferences on the organization of public governance. One general conclusion is that when regional differences are large, the central government should be in charge; otherwise, local governments should be in charge.

Keywords: Public governance; Government hierarchy; Resource allocation; Bureaucratic inefficiency (search for similar items in EconPapers)
JEL-codes: H1 H4 H7 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s10058-023-00344-8

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