We develop a two-region model where the decentralized provision of spillover goods and other public expenditures is financed by means of user fees. We show that a decentralized solution tends to be inefficient. If the regional spillover goods are substitutes, user fees tend to be inefficiently...

The paper analyzes the strategic effects of decentralized user-fee and enforcement policies for the financing of interregional spillover goods. We derive the equilibrium pricing and enforcement rules for a n-region economy.We show that under mild conditions on the pattern of substitution between...