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American Economic Review: Vol. 99 No. 4 (September 2009)
AER Volume. 99, Issue 4 | 
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Think Locally, Act Locally: Spillovers, Spillbacks, and Efficient Decentralized Policymaking
Article Citation
Ogawa, Hikaru, and
David E. Wildasin. 2009. "Think Locally, Act Locally: Spillovers, Spillbacks, and Efficient Decentralized Policymaking."
American Economic Review,
99(4): 1206-17.
DOI: 10.1257/aer.99.4.1206
DOI: 10.1257/aer.99.4.1206
Abstract
We analyze models with interjurisdictional spillovers among heterogeneous
jurisdictions, such as CO2 emissions that affect the global environment. Each
jurisdiction's emissions depend upon the local stock of capital, which is interjurisdictionally
mobile and subject to local taxation. In important cases,
decentralized policy-making leads to efficient resource allocation, even in the
complete absence of corrective interventions by higher-level governments or
coordination of policy through Coasian bargaining. In particular, even when
the preferences and production technologies differ among the agents, the decentralized
system can result in globally efficient allocation. (JEL D62, H23, H73,
H87, Q58)
Article Full-Text Access
Full-text Article
Authors
Ogawa, Hikaru (Nagoya U)
Wildasin, David E. (U KY)
Wildasin, David E. (U KY)
JEL Classifications
D62: Externalities
H23: Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies
H73: State and Local Government; Intergovernmental Relations: Interjurisdictional Differentials and Their Effects
H87: International Fiscal Issues; International Public Goods
Q58: Environmental Economics: Government Policy
H23: Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies
H73: State and Local Government; Intergovernmental Relations: Interjurisdictional Differentials and Their Effects
H87: International Fiscal Issues; International Public Goods
Q58: Environmental Economics: Government Policy
