The Theory of Administrative Federalism: An Alternative to Fiscal Centralization and Decentralization  

Oleh:

Schwager, Robert

Jenis: Article from Journal - ilmiah internasional
Dalam koleksi: Public Finance Review vol. 27 no. 3 (Mei 1999), page 282-309.
Fulltext: 282PFR273.pdf (2.53MB)

Isi artikel

Under administrative federalism, the central state sets quality standards for public projects and the local jurisdictions decide which projects are carried out. Decentralized decisions suffer from an interjurisdictional spillover. The central state cannot distinguish between useful and useless projects. It is shown that administrative federalism is always preferable to decentralization. This is due to the distinction between the net benefit of increasing the quality level for all projects and the net benefit of carrying out an additional project. If the information problem is sufficiently important, administrative federalism also is preferable to centralization. Finally, it may even implement the first best solution.

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