The Possibility of Oversupply of Local "Public" Goods: A Critical Note

Brainard, William C.; Dolbear, F. Trenery

doi:10.1086/259241

Cited by 49 publications

(16 citation statements)

References 2 publications

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“…The cost variable (c) has been constructed by multiplying 8 The only remarkable attempt to build a metropolitan government occurred in the urban metropolitan area of Barcelona during the 80's (known as "Corporación Metropolitana de Barcelona"), but this institution was banned by a law of the regional government and its main responsibilities (water transportation and treatment, and public transportation) assigned to two different public agencies. average per capita spending in the sample and a cost index, computed from a set of variables that are available for our sample of municipalities and which have been used in previous analysis of local government costs in Spain (Solé-Ollé [34], Bosch and Solé-Ollé [7]): urbanized land area per capita (Land), wage rate in the service sector (Wage), unemployed (%Unemployed), non-EU immigrants (%Immigrants), 9 and an index of service responsibilities (Responsibilities). The variable Land accounts for the effects of urbanization patterns on costs.…”

Section: Data and Variablesmentioning

confidence: 99%

Expenditure spillovers and fiscal interactions: Empirical evidence from local governments in Spain

Solé‐Ollé¹

2006

Journal of Urban Economics

124

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The paper presents a framework for measuring spillovers resulting from local expenditure policies. We identify and test for two different types of expenditure spillovers: (i) "benefit spillovers", arising from the provision of local public goods, and (ii) "crowding spillovers", arising from the crowding of facilities by residents in neighboring jurisdictions. Benefit spillovers are accounted for by assuming that the representative resident enjoys the consumption of a local public good in both his own community and in those surrounding it. Crowding spillovers are included by considering that a locality's consumption level is influenced by the population living in the surrounding localities. We estimate a reaction function, with interactions between local governments occurring not only between expenditure levels, but also between neighbors' populations and expenditures. The equation is estimated using data on more than 2,500 Spanish local governments for the year 1999. The results show that both types of spillovers are relevant.

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Section: Data and Variablesmentioning

confidence: 99%

Expenditure spillovers and fiscal interactions: Empirical evidence from local governments in Spain

Solé‐Ollé¹

2006

Journal of Urban Economics

124

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“…Buchanan and Kafoglis (1963), Williams (1966), and Brainard and Dolbear (1967) pioneered the discussion on the interregional spillover of public services. Buchanan and Kafoglis (1963), Williams (1966), and Brainard and Dolbear (1967) pioneered the discussion on the interregional spillover of public services.…”

Section: Introductionmentioning

confidence: 99%

A macroeconomics perspective on international coordination in sales taxes

Takamatsu

2013

The Journal of International Trade & Economic Development

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This article investigates how international coordination vis-a`-vis sales tax policies affects the welfare of participating countries. A country's tax policies have asymmetric effects on the pricing behaviors of domestic and overseas producers. International cooperation endogenizes the externality that improves the purchasing power of foreign residents, but at the cost of its own residents' work efforts. The first-best taxes are lower than in the noncooperative case. When world welfare is utilitarian, smaller economies may experience welfare losses from cooperation under the weak income effect of sales tax. We propose a coordinated tax rule that all countries agree to employ.

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“…For example, suburban residents benefit from amenities provided in central cities; communities often build joint infrastructures which benefit residents in all communities; in the case of transfrontier pollution, countries benefit from pollution abatement programs of other countries. In the late 1960's, a series of theoretical studies on spillovers ((Williams,66), Brainard and Dolbaer (1967), Boskin (1973)) culminated in Oates (1972)'s study of fiscal federalism, which points out conditions under which central provision of local public goods with spillovers should be preferred to a decentralized system. 1 The objective of this paper is to revisit the issue of local public provision with spillovers using modern game-theoretic tools.…”

Section: Introductionmentioning

confidence: 99%

The Effect of Spillovers on the Provision of Local Public Goods

Bloch

Zenginobuz

2004

SSRN Journal

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This paper analyzes the provision of local public goods with positive spillovers across jurisdictions. If spillovers are symmetric, the noncooperative game played by jurisdictions admits a unique equilibrium, and an increase in spillovers reduces the total provision of public goods. Smaller jurisdictions always reduce their contribution, but larger jurisdictions can increase their contribution. When spillovers are asymmetric, equilibrium is unique if spillovers are low, while multiple equilibria exist for high spillover values. In the case of two jurisdictions, an increase in the flow of spillovers to one jurisdiction benefits agents from that jurisdiction but harms agents in the other jurisdiction. Beyond the case of two jurisdictions, the effect of changes in spillovers cannot be signed. An increase in the spillovers flowing to a jurisdiction can actually result in an increase in the supply of public goods by that jurisdiction and harm agents residing in it, while benefiting agents in the other jurisdictions. The results of the paper reveal the complexity of interactions that will plague the design of institutions for multijurisdictional local public good economies with spillovers.

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The Possibility of Oversupply of Local "Public" Goods: A Critical Note

Cited by 49 publications

References 2 publications

Expenditure spillovers and fiscal interactions: Empirical evidence from local governments in Spain

Expenditure spillovers and fiscal interactions: Empirical evidence from local governments in Spain

A macroeconomics perspective on international coordination in sales taxes

The Effect of Spillovers on the Provision of Local Public Goods

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