COPS and crime

Publisher Summary This chapter discusses the demand side of the public sector and focuses on normative rather than positive models. The political economy of the local public sector has been studied by both political scientists and economists, but efforts to combine the two have had limited success. The addition of supply-side-political assumptions to Tiebout models has led largely to negative conclusions about the existence and efficiency of the local public competitive analogy. The Tiebout model has provided one useful, albeit somewhat artificial, model of a more or less competitive local public sector. However, the value and usefulness of the Tiebout model is likely to diminish in the future, and an alternative or alternatives are needed. Several monopoly models of local government have been suggested to provide a useful counterpart to the Tiebout approach. Public goods are viewed as brands that differ in one or more of the attributes. The extent to which local governments compete among themselves in the supply of the public good becomes issues that are studied using modern techniques of industrial organization. Local public economics is a subject area that is rich with empirical work, but a good deal of high quality work remains to be undertaken. The relationship between the mobility of households and the provision of local public services is one area that typifies work in local public finance. A well-specified and correctly estimated model helps to evaluate the correct method by which the demands for local public goods are determined.

Chapter 11 The economics of the local public sector

Until quite recently, theoretical analyses of the impact of intergovernmental grants on public expenditures have run either implicitly or explicitly in terms of the familiar theory of indiv-idual choice' The recipient of the grant is typically viewed in effect as an individual decision maker with preference patterns of the usual sort defined over private and public goods Within this theoretical structure, a number of propositions have been developed including, for example, the conclusion that, dollar-for-dollar, a matching grant will induce a greater expansion in spending on the public good than will a lump-sum, unconditional grant The difficulty with this analysis, as we all have been well aware, is that this is not the appropriate theoretical framework for the study of intergovernmental grants Such grants are not grants to individuals; they are grants to groups of people This means that the effects of these grants depend upon the process by which the group makes collective decisionis A real theory of intergovernmental grants must, for this reason, be one which takes explicitly into account the political process through which the collectivity determines its levels of spending upon public goods In one recent paper, Goetz and McKnew have shown for a special case that it is con-ceivable that lump-sum grants can have a greater stimulative impact on public spending than an equal-dollar matching grant Using a rather complicated model in which the collectivity decides separately on the aggregate level of public spending and on the mix of public programs, they show that, if individual preferences bear a particular kind of relation to one another, simple majority voting will lead to greater public expenditure in response to a lump-sum grant than to a matching grant of the same amount Whether this special case is likely to occur with any frequency is another matter, but, at any rate, it is clear that one can concoct particular instances in which a process of collective decision making will lead to results which are at variance with the conclusions which follow from the rnodel of individual choice Our purpose in this paper is to try to explore somewhat more systematically the effects of these two types of intergovernmental grants The question arises whether there are interesting classes of collective decision processes for which the comparative effects of the two types of intergovernmental grants can be predicted In an earlier paper on revenue-sharing (Bradford and Oates), we have constructed a framework for conceptualizing collective budget determination which offers the possibility of dealing systematically with the effects of * The authors are grateful for a number of helpful comnments to the participants in economics seminars at McMaster University and at Rutgers University In addition, they are indebted to the F'ord Foundation whose support has greatly facilitated this study 1 For an excellent presentation using this approach, see James Wilde

https://www.jstor.org/stable/info/1817026

Towards a Predictive Theory of Intergovernmental Grants

The flypaper effect literature dates back three decades. It is overwhelmingly neo- classical in approach, attempting to improve the median voter demand model and/or temper it with public choice supply-side perspectives. Whilst this approach provided valuable early substantial analytical insights, more recent papers seem to have contributed only marginally to an understanding of the flypaper effect, if indeed it exists at all. Hence, as well as providing a long-overdue comprehensive review of the literature on the flypaper effect, this paper identifies more productive avenues for further research.

The flypaper effect: Identifying areas for further research

http://davidwildasin.us/pub/Boadway-Pestieau-Wildasin-Tax-Transfer-Policies-Voluntary-Provision-Public-Goods.pdf

Tax-transfer Policies and the Voluntary Provision of Public-goods

Theoretical attention is given to two aspects of intergovernmental aid programs. The relative responses of a recipient government are compared under various function specifications, matching requir...

James A. Wilde

Papers

Grants-in-Aid: The Analytics of Design and Response.

The expenditure effects of grant-in-aid programs