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Piling on: Multi-Level Government and the Fiscal Common-Pool

46 Pages Posted: 16 Jun 2008  

Christopher R. Berry

University of Chicago - Irving B. Harris Graduate School of Public Policy Studies

Date Written: May, 2008

Abstract

This paper discusses the common-pool problems that arise when multiple territorially overlapping governments share the authority to provide services and levy taxes in a common geographic area. Contrary to the traditional Tiebout model in which increasing the number of competing governments improves efficiency, I argue that increasing the number of overlapping governments results in "overfishing" from the shared tax base. I test the model empirically using data from U.S. counties and find a strong positive relationship between the number of overlapping jurisdictions and the size of the local public sector. Substantively, the "overlap effect" amounts to roughly 10 percent of local revenue.

Keywords: overlapping jurisdictions, special districts, Tiebout, concurrent taxation, tax competition

JEL Classification: H11, H2, H71, H77, H73

Suggested Citation

Berry, Christopher R., Piling on: Multi-Level Government and the Fiscal Common-Pool (May, 2008). Available at SSRN: https://ssrn.com/abstract=1144644 or http://dx.doi.org/10.2139/ssrn.1144644

Christopher R. Berry (Contact Author)

University of Chicago - Irving B. Harris Graduate School of Public Policy Studies ( email )

1155 East 60th Street
Chicago, IL 60637
United States

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