Central government subsidies to local public goods

We examine the welfare effects of a central government's subsidy for a local public good in a Nash equilibrium model with two types of public goods. We first show that the welfare effect depends on the substitution and evaluation effects. We also investigate the optimal subsidy rate in a second-best framework and explore how the optimal subsidy scheme depends on the relative evaluation of the two types of public goods. Copyright Springer-Verlag Berlin Heidelberg 2002

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Year of publication:	2002
Authors:	Akai, Nobuo ; Ihori, Toshihiro
Published in:	Economics of Governance. - Springer. - Vol. 3.2002, 3, p. 227-239
Publisher:	Springer
Subject:	Local public good \| central public good \| subsidy \| Lindahl price criterion

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Extent:	text/html
Type of publication:	Article
Classification:	H23 - Externalities; Redistributive Effects ; Environmental Taxes and Subsidies ; H41 - Public Goods ; H71 - State and Local Taxation, Subsidies, and Revenue
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005391104