Decentralization of Industrial Policy as Strategic Delegation

Karl Morasch ()
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Karl Morasch: University of Augsburg, Department of Economics

No 193, Discussion Paper Series from Universitaet Augsburg, Institute for Economics

Abstract: What is the appropriate degree of centralization in the context of industrial policy? The basic advantage of centralization results from internalization of external effects. While most of the literature stresses the superior information of regional authorities as a countervailing force, the present paper discusses another argument in favor of decentralization: Delegation of authority to regional governments will improve the position of the home country in the policy game with a foreign government. In a linear Cournot oligopoly with two domestic regions delegation is shown to be profitable if the domestic industry comprises at least twice as many firms as the foreign industry.

JEL-codes: D43 F13 L13 L52 (search for similar items in EconPapers)
Date: 2000-02
New Economics Papers: this item is included in nep-reg
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Citations: View citations in EconPapers (1)

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