Details

Autor(en) / Beteiligte

• Ania, Ana B.
• Wagener, Andreas

Titel

Laboratory federalism with public funds sharing

Ist Teil von

• Economic inquiry, 2021-07, Vol.59 (3), p.1047-1065

Ort / Verlag

Boston, USA: Wiley Periodicals, Inc

Erscheinungsjahr

2021

Link zum Volltext

Quelle

Wiley Online Library - AutoHoldings Journals

Beschreibungen/Notizen

• Laboratory federalism hypothesizes that decentralization fosters innovation and learning in multijurisdictional systems, conducing to good policies. We discuss this using evolutionary stability, focusing in this paper on public funds sharing. In a model of rich‐to‐poor redistribution with labor mobility, where policy choices based on relative success lead to drastic welfare erosion, suitably designed sharing schemes can restore efficiency. Their necessary properties are the same as in a Nash equilibrium, showing they are a powerful corrective device for different modes of government interaction. Two drawbacks appear: reduced accuracy due to large multiplicity and a tendency to overly reward inefficiently high redistribution.