Endogenous local public good prices in decentralised economies with population mobility and inter-regional transfers
Economic models of regional economies with local public goods, corrective inter-regional transfers and population mobility assume decision-makers are small price takers. We argue this is reasonable for private goods but that local public good prices are in fact endogenous, varying with settlement pa...
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| Format: | Working Paper |
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School of Economics and Finance, CBS
2015
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| Online Access: | http://www.curtin.edu.au/research/crae/local/docs/CRAE_WP_03042015_Jeff.pdf http://hdl.handle.net/20.500.11937/27678 |
| _version_ | 1848752330389848064 |
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| author | Petchey, Jeffrey Petchey, J. |
| author_facet | Petchey, Jeffrey Petchey, J. |
| author_sort | Petchey, Jeffrey |
| building | Curtin Institutional Repository |
| collection | Online Access |
| description | Economic models of regional economies with local public goods, corrective inter-regional transfers and population mobility assume decision-makers are small price takers. We argue this is reasonable for private goods but that local public good prices are in fact endogenous, varying with settlement patterns and hence regional/central policies. Decision-makers should therefore be modelled as having the power to distort policies in order to manipulate public good prices. We show that incentive equivalence in regional economies is sufficient to ensure that known efficiency results, whether the transfer is assigned to regions or the centre, are undisturbed by endogenous local public good prices. However, the corrective inter-regional transfer now includes input price externalities arising from migration which are not accounted for in price taking models. Hence, allowing for endogenous local public good prices extends what we know about the theory of corrective inter-regional transfers. |
| first_indexed | 2025-11-14T08:06:54Z |
| format | Working Paper |
| id | curtin-20.500.11937-27678 |
| institution | Curtin University Malaysia |
| institution_category | Local University |
| last_indexed | 2025-11-14T08:06:54Z |
| publishDate | 2015 |
| publisher | School of Economics and Finance, CBS |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | curtin-20.500.11937-276782017-01-30T13:00:34Z Endogenous local public good prices in decentralised economies with population mobility and inter-regional transfers Petchey, Jeffrey Petchey, J. inter-governmental differentials and their effects federal state relations federalism Economic models of regional economies with local public goods, corrective inter-regional transfers and population mobility assume decision-makers are small price takers. We argue this is reasonable for private goods but that local public good prices are in fact endogenous, varying with settlement patterns and hence regional/central policies. Decision-makers should therefore be modelled as having the power to distort policies in order to manipulate public good prices. We show that incentive equivalence in regional economies is sufficient to ensure that known efficiency results, whether the transfer is assigned to regions or the centre, are undisturbed by endogenous local public good prices. However, the corrective inter-regional transfer now includes input price externalities arising from migration which are not accounted for in price taking models. Hence, allowing for endogenous local public good prices extends what we know about the theory of corrective inter-regional transfers. 2015 Working Paper http://hdl.handle.net/20.500.11937/27678 http://www.curtin.edu.au/research/crae/local/docs/CRAE_WP_03042015_Jeff.pdf School of Economics and Finance, CBS fulltext |
| spellingShingle | inter-governmental differentials and their effects federal state relations federalism Petchey, Jeffrey Petchey, J. Endogenous local public good prices in decentralised economies with population mobility and inter-regional transfers |
| title | Endogenous local public good prices in decentralised economies with population mobility and inter-regional transfers |
| title_full | Endogenous local public good prices in decentralised economies with population mobility and inter-regional transfers |
| title_fullStr | Endogenous local public good prices in decentralised economies with population mobility and inter-regional transfers |
| title_full_unstemmed | Endogenous local public good prices in decentralised economies with population mobility and inter-regional transfers |
| title_short | Endogenous local public good prices in decentralised economies with population mobility and inter-regional transfers |
| title_sort | endogenous local public good prices in decentralised economies with population mobility and inter-regional transfers |
| topic | inter-governmental differentials and their effects federal state relations federalism |
| url | http://www.curtin.edu.au/research/crae/local/docs/CRAE_WP_03042015_Jeff.pdf http://hdl.handle.net/20.500.11937/27678 |