externalities appear along the lifecycle. In a simple model, we show that it may be efficient to subsidize innovative firms in their … early stages or to protect mature firms from competition to appropriate these externalities. However, non …-benevolent politicians may not choose efficient policies. Real-world examples indicate that politicians tend to concentrate on externalities …

. We identify an important asymmetry between positive and negative externalities and show that centralization may not be … efficient 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. …

We investigate externalities in higher education enrollment over the course of development in a two-sector model. Each … acquiring human capital. Both sectors exhibit productivity externalities in the size of the skill-specific labor and in the … stages of development witness underenrollment in higher education, while highly developed economies experience overenrollment. …