Inter-Governmental Competition: Market Solutions to Political Problems
CORE Discussion Paper No. 2004/87
15 Pages Posted: 21 Jun 2005
Date Written: November 2004
Abstract
In normative public economics, inter-governmental competition is usually viewed as harmful. Although empirical support for this position does not abound, market integration has intensified competition among developed countries. In this paper we argue that when assessing welfare effects of inter-governmental competition for various forms of government imperfections (the public choice critique), the outcome is ambiguous and competition can be welfare improving.
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