The Superiority of Environmental Federalism in the Presence of Lobbying and Prior Tax Distortions

It is generally believed that environmental federalism tends to generate greater pollution emissions than centralized policymaking. This paper demonstrates that the opposite can occur in the presence of lobbying. Although the decentralized regime gives rise to a tax‐interaction effect, which induces policymakers to set lax environmental policies, it may also reduce the political pressure on enlarging allowed emissions. If the latter outweighs the former, then the decentralized regime will generate less pollution than the centralized regime. Moreover, we also show that the decentralized regime can be more efficient than the centralized regime, which provides an alternative theoretical support for the superiority of environmental federalism.     

Spending Growth With Vertical Fiscal Imbalance: Decentralized Government Spending In Norway, 1880–1990

Vertical fiscal imbalance, decentralized responsibility of spending with centralized financing, creates a common pool problem with spending pressure towards central funds. A model of decentralized government spending under vertical fiscal imbalance is developed, and the importance of national political characteristics for internalization of costs and spending level is investigated in an econometric analysis of Norway during 1880–1990. We argue that in a parliamentary democracy, the internalization of costs is influenced by the party fragmentation of parliament. This is confirmed by the econometric analysis using a Herfindahl index as a measure of fragmentation and political strength.     

Human capital and economic growth in an overlapping generations model

The paper describes an aggregative optimal growth model, the essential features of which are that individuals are mortal and obtain their labor skill through educational training. The process of human capital formation is described by an education function which relates the pass rate to the educational expenditure per student. Two alternative scenarios, private and public education regimes, are separately investigated. Under the decentralized education regime, risk-neutral individuals borrow to finance their education when young. Under the centralized education regime, the cost of education is financed by taxes imposed on the workers in the economy, and the central government maximizes a long-term social target function. The equilibria of both regimes are analyzed and various comparative static results derived. It is shown that educational investment in a decentralized equilibrium is higher than that in the centralized steady state. We also establish that there exists a time discount rate at which or above which the decentralized per capita consumption exceeds that of the centralized steady state whereas for time rates of discount sufficiently near the population growth rate, the above result will be reversed.     

The explosive combination of religious decentralization and autocracy

The relationship between religion and politics is explored from a theoretical standpoint. Religious clerics can be seduced by an autocrat and political stability is at stake. The autocrat's decisions consist of two measures both capable of antagonizing religious clerics: adopting secular reforms and unduly appropriating part of the national wealth, which generally are complements. Compared to centralized religions, decentralized religions, such as Islam, tend to discourage secular reforms and corruption but those effects are not guaranteed if the autocrat accepts political instability. The main hypotheses and the central results of the theory are illustrated with regime case studies that refer to contemporary times.     

The political economy of capital market integration and tax competition

This paper investigates the effect of capital market integration (CMI) on capital taxes in a political economy framework in which policy is influenced by lobbying of interest groups. CMI increases the efficiency cost of the capital tax, which introduces incentives to reduce the tax rate, but also reduces lobbying by owners of capitalists, which introduces countering incentives to increase the tax rate. CMI can therefore result in a higher capital tax rate. When the market share of each country is small, CMI may increase government supply of public goods and enhance efficiency, which implies that, in the presence of policy endogeneity through lobbying, decentralized policymaking can be more efficient than centralized policymaking.     

Branch banking, entry deterrence, and technology decisions

The paper sets up a theoretical model of banking firms to investigate the relationship between oligopolistic competition and technology structure by using the concept of decentralized operating decisions and centralized investment decisions. It concludes that the representative branch and the new entrant will choose the technology which is deviated from its cost-minimization level if neither of them acts as a quasi-competitive deposit demanders in the case of costless reversibility of capacity decision. In the case of capacity reversed not costlessly, the representative branch will choose the cost-minimizing technology level and the entrant's technology decision depends on its rival's conjectural variation.     

监管模式、政治体制与矿难——基于跨国数据的证据*

煤矿安全生产问题不仅是中国面临的严峻问题,也是一个世界性的难题。本文首次利用1982-2014年九个产煤大国的跨国面板数据,从经济学的角度检验了煤矿监管模式和政治体制对矿难的影响。结果表明：（1）煤炭安全生产的集权监管有利于减少矿难死亡率。一个国家的煤矿安全监管模式由分权改成集权,可以减少近一半的死亡率。（2）一个国家的政治体制不会直接影响矿难的死亡率。这说明煤矿安全生产问题主要是一个监管体制问题,而不是一个政治体制问题。（3）在发展中国家,集权监管模式对降低矿难死亡率的效果更明显。（4）在转型国家,监管集权和改进政府问责都能降低矿难死亡率。本文的结果对于矿难的跨国比较分析以及遏制矿难具有重要的政策含义。     

Centralized versus decentralized provision of local public goods: a political economy approach

This paper takes a fresh look at the trade-off between centralized and decentralized provision of local public goods. It argues that the sharing of the costs of local public spending in a centralized system will create a conflict of interest between citizens in different jurisdictions. When spending decisions are made by a legislature of locally elected representatives, this conflict of interest will play out in the legislature. Depending on precisely how the legislature behaves, the result may be excessive public spending or allocations of public goods characterized by uncertainty and misallocation across districts. The extent of the conflict of interest between districts is affected by spillovers and differences in tastes for public spending. Thus, the relative performance of centralized and decentralized systems depends upon spillovers and differences in tastes for public spending, but for different reasons than suggested in the existing literature.     

The co-location of production and distribution: emergent trends in consumer services

This paper identifies ,re-emergence, of the co-location of elements of the production 'process with the distribution process in a range of consumer series. It suggests that this trend is being facilitated by technological development, particularity in control systems, that allow many of the benefits of centralized production to be achieved with decentralized production and that co-location satisfies additional consumer preferences, not achievable with centralized production. The authors indicate how this trend might be examined within a posi--Fordist framework.     

Trade Liberalization and Environmental Taxation in Federal Systems

The literature on trade liberalization and environment has not yet considered federal structures. In this paper, we show how the design of environmental policy in a federal system has implications for the effects of trade reform. Trade liberalization leads to a decline in pollution taxes, regardless of whether pollution taxes are set at the federal (centralized) or local (decentralized) level, and it increases social welfare. The effect under a decentralized system is smaller than if these taxes are set by the federal government, and pollution emissions therefore decline in this case. Moreover, majority bias interacts with trade liberalization if federal taxes are used.     

Welfare,competition, specialization and growth

In this paper we consider a model of horizontal differentiation with a quite general production function and derive the closed form solutions for the level of the variables in the decentralized economy and in the social planner case. This enables us to analyze how consumers’ welfare varies in terms of the degree of competition and the degree of returns to specialization. We find that welfare is increasing in the degree of returns to specialization both in the market economy and in the centralized economy and the decentralized economy's welfare is a bell-shaped function of the degree of competition.     

On monopoly welfare gains,scale efficiency and the costs of decentralization

Inside the neoclassical framework a monopoly produces an unambiguous loss of social welfare. In this article some dynamic efficiency aspects of monopoly in connection with economies of scale are discussed. Two different cases of the costs of capacity expansion for a branch are compared: (1) the capacity expansion takes place with only one, multiplant, monopoly firm, (2) the capacity expansion takes place in a branch producing the same output but with two or more multiplant firms. It is argued that monopoly welfare gains are likely to arise for a centralized process of capacity expansion compared to a decentralized one.     

Labor taxation, public finance, and wage determination: evidence from OECD countries

This paper analyzes the relationship between unemployment, average effective labour tax rates and public spending in 17 OECD countries. The focus is on the degree of centralization and cooperation in wage setting. Estimation results from a dynamic time-series-cross-section model suggest that the countries where wage setting takes place at the firm level have used labour taxes less extensively in financing welfare spending, compared to countries with centralized or decentralized bargaining. This is consistent with another finding, according to which labour taxes distort the labour demand the least in the countries with firm level bargaining.     

Employment and Wages in the Private and Local Government Sectors in a Centralized Fiscal System

This paper discusses the interaction between the local government and private sector in an institutional context consistent with a centralized fiscal system. Under decentralized wage setting in the private sector, the effects of shocks in the two sectors depend on whether private and local public goods are substitutes or complements in the union utility function. Higher wage markup in the local government sector unambiguously decreases government output while the effect on private sector employment is ambiguous. Higher income taxes have ambiguous effects on local government output. Shocks in the private sector can be reinforced through feedback effects from the local government sector. A shift from decentralized to centralized wage setting in the private sector reduces wages and increases employment in both sectors.     

A search model of centralized and decentralized trade

This paper presents a search model of centralized and decentralized trade. In a centralized market, trades are intermediated by market makers at publicly posted bid–ask prices. In a decentralized market, traders search counterparties. Prices are negotiated and transactions are conducted in private meetings among traders. Traders can choose which market to enter. The determinants of bid–ask spreads and liquidity are analyzed. The welfare consequence of the market fragmentation is also analyzed. It is shown that compared to the competitive market-making, monopolistic market-making may improve social welfare.     

The effect of the Mahathir regime on the Malaysian economy

Dr. Mahathir bin Mohamad is often credited with Malaysia's dramatic economic success post-1980. It is well known that the Mahathir regime installed centralized power in the Office of the Prime Minister (PM) and greatly extended state capacity through a far-reaching clientelist system. Prima Facie, the Malaysian experience appears to validate power centralization and state capacity as complementary to economic development. Though these changes did make Malaysia more susceptible to corruption, dramatically exhibited in 2015 with the 1MDB 5 billion dollar scandal, it has been argued that the clientelist political structure installed in Malaysia generally manages corruption at tolerable levels in order to provide the state the capacity needed to implement controls for economic development that began in the 1980s. While Malaysia experienced impressive economic growth during the Mahathir administration, our test using the Synthetic Control Method finds that GDP per capita fell well below what would have been expected under the governing structures in place in the 1970s, before Mahathir took office—a loss of approximately $4000 per capita below its potential. This study provides evidence of powerful negative economic consequences attributable to greater power centralization and enhanced state capacity inaugurated under Mahathir.     

Unemployment durations of job losers in a labour market in transition

Slovakia is one of the Central European countries in transformation from a centralized command system to a decentralized market economy. This paper studies the labour market position of Slovak job losers. Using data from labour force surveys we analyse exit rates out of unemployment. We find that male, young, higher educated job losers in districts with low unemployment rates have substantially shorter unemployment durations than their counterparts. There is evidence that for some job losers it is very hard to find a new job.     

Should Welfare Administration be Centralized or Decentralized? Evidence from a Policy Experiment

The 2005 reform of the German welfare system introduced two competing organizational models for welfare administration. In most districts, a centralized organization was established where local welfare agencies are bound to central directives. At the same time, 69 districts were allowed to opt for a decentralized organization. We evaluate the relative success of both types in terms of integrating welfare recipients into employment. Compared to centralized organization, decentralized organization has a negative effect on employment chances of males. For women, no significant effect is found. These findings are robust to the inclusion of aspects of internal organization common to both types of agencies.     

人口流动性、公共收入与支出--户籍制度变迁动因分析

本文分析了人口流动性的内生决定 ,以此解释中国户籍管理政策变迁的动因。文章表明 ,分权框架下的区际竞争将推动政府降低人口流动成本。一般而言 ,集权 ①框架下的最优流动性水平普遍低于分权框架下的流动性水平。与我国近 2 0年来户籍政策变化相一致的是 ,跨区劳动力配置需求的上升增加了户籍管制的效率损失成本 ,将推动人口流动成本下降。我们认为 ,除了协调地方公共品供给外部性、限制地区间税收竞争以最大化税收收入这两个基本原因之外 ,我国户籍管制的另一个特殊原因是便于执行地区差别政策。而设置流动成本的效率性取决于政府目标与社会福利最大化的一致性程度。     

The political agenda effect and state centralization

We provide a potential explanation, based on the “political agenda effect”, for the absence of, and unwillingness to create, centralized power in the hands of a national state. State centralization induces citizens of different backgrounds, interests, regions or ethnicities to coordinate their demands in the direction of more general-interest public goods, and away from parochial transfers. This political agenda effect raises the effectiveness of citizen demands and induces them to increase their investments in conflict capacity. In the absence of state centralization, citizens do not necessarily band together because of another force, the escalation effect, which refers to the fact that elites from different regions will join forces in response to the citizens doing so. Such escalation might hurt the citizen groups that have already solved their collective action problem (though it will benefit others). Anticipating the interplay of the political agenda and escalation effects, under some parameter configurations, political elites strategically opt for a non-centralized state. We show how the model generates non-monotonic comparative statics in response to the increase in the value or effectiveness of public goods (so that centralized states and public good provision may be absent precisely when they are more beneficial for society). We also suggest how the formation of a social democratic party may sometimes induce state centralization (by removing the commitment value of a non-centralized state), and how elites may sometimes prefer partial state centralization.