Local public works and intergovernmental transfers under asymmetric information

被引:9
作者
Besfamille, M [1 ]
机构
[1] Univ Torcuato Di Tella, Dept Econ, Buenos Aires, DF, Argentina
关键词
fiscal federalism; local public works; intergovernmental transfers; bidimensional asymmetric information; contracts;
D O I
10.1016/S0047-2727(02)00164-0
中图分类号
F [经济];
学科分类号
02 ;
摘要
This paper studies local public works decisions in a hierarchical setting under bidimensional asymmetric information. A local authority plans to undertake a public work and delegates its construction to a firm. The federal government decides whether to fund the project, without being informed of either the project's benefit or the constructor's efficiency. The local authority knows these values. To deal with this informational gap, the federal government designs a public work contract, specifying transfers to the local authority and to the firm. We show under which circumstances cost-sharing and compensations emerge as incentive devices. Then we identify which projects are effectively constructed. More works with low (high) benefits are undertaken (shut down) than under full-information. (C) 2002 Elsevier B.V. All rights reserved.
引用
收藏
页码:353 / 375
页数:23
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