. We identify an important asymmetry between positive and negative externalities and show that centralization may not be e …¢ cient in economies with positive externalities even when regions are identical and centralization does not entail a loss of … accountability. We also show that decentralization can only Pareto dominate centralization in economies with negative externalities. …

factors for energy taxes are the optimal tariff argument, the need to correct externalities such as global warming, and second …