Decentralized Leadership

19 Pages Posted: 13 Oct 2016

See all articles by Emilson Delfino Silva

Emilson Delfino Silva

University of Alberta - Department of Marketing, Business Economics & Law

Date Written: August 25, 2016

Abstract

This paper studies the efficiency of decentralized leadership in federations where selfish regional governments provide regional and federal public goods and the benevolent central government implements interregional earmarked and income transfers. Without residential mobility, unlimited decentralized leadership is efficient only if the center implements redistributive interregional income and earmarked transfers to equate consumption of private and regional public goods across regions. Such policies perfectly align the incentives of the selfish regional governments. With imperfect residential mobility, decentralized leadership is efficient if the center adopts redistributive interregional income and earmarked policies and there is a common labor market in the federation.

Keywords: decentralized leadership, earmarked transfers, common labor market, rotten kids

JEL Classification: C720, D620, D720, D780, H410, H770, H870, Q280, R300, R500

Suggested Citation

Delfino Silva, Emilson, Decentralized Leadership (August 25, 2016). CESifo Working Paper Series No. 6064. Available at SSRN: https://ssrn.com/abstract=2851728

Emilson Delfino Silva (Contact Author)

University of Alberta - Department of Marketing, Business Economics & Law ( email )

Edmonton, Alberta T6G 2R6
Canada

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