Oates' Decentralization Theorem with Household Mobility
Francis Bloch () and
Ünal Zenginobuz ()
Working Papers from HAL
This paper studies how Oates' trade-off between centralized and decentralized public good provision is affected by changes in households' mobility. We show that an increase in household mobility favors centralization, as it increases competition between jurisdictions in the decentralized regime and accelerates migration to the majority jurisdiction in the centralized regime. Our main result is obtained in a baseline model where jurisdictions first choose taxes, and households move in response to taxb levels. We consider two variants of the model. If jurisdictions choose public goods rather than tax rates, the equilibrium level of public good provision is lower, and mobility again favors centralization. If jurisdictions maximize total utility rather than resident utility, the equilibrium level of public good provision again decreases, and mobility favors centralization when the size of the mobile population is bounded.
Keywords: Oates' decentralization theorem; Fiscal federalism; Household mobility; Spillovers; Tax competition (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mig, nep-pbe, nep-upt and nep-ure
Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-00657823
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3) Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:hal:wpaper:hal-00657823
Access Statistics for this paper
More papers in Working Papers from HAL
Bibliographic data for series maintained by CCSD ().