When purchasing goods and services, governments often discriminate in favor of domestic suppliers. It is widely assumed that such behavior is motivated by protectionism. Although this interpretation is sometimes valid, it is also puzzling. After reviewing some of the puzzles, the paper proposes...

This paper argues that to associate intergovernmental grants with the objectives of equity and efficiency implies that governments are irrational. The authors find long-term systematic irrationality in the behavior of any institution difficult to accept. The authors, therefore, propose that the...