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Conditional grants to independent regional governments: The trade-off between incentives and wasteful grantseeking
The paper addresses the welfare implications of conditional grants in the presence of inefficiencies in regional production. While conditional grants may set incentives for regions to reduce inefficiencies, resources are wasted in the process of grant-seeking. We provide a theoretical model to asses...
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| Published in: | MAGKS - Joint Discussion Paper Series in Economics (Band 30-2010) |
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| Main Authors: | , |
| Format: | Work |
| Language: | English |
| Published: |
Philipps-Universität Marburg
2010
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| Subjects: | |
| Online Access: | PDF Full Text |
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| Summary: | The paper addresses the welfare implications of conditional grants in the presence of inefficiencies in regional production. While conditional grants may set incentives for regions to reduce inefficiencies, resources are wasted in the process of grant-seeking. We provide a theoretical model to assess the net effect on welfare. A game-theoretic context is developed to derive the optimal grant-distribution scheme. Depending on the characteristics of the collective good and of the regional government, the optimal ratio of conditional to block grants and the optimal number of recipients vary. The impact of different factors on the optimal grant-distribution scheme is derived. |
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| Physical Description: | 32 Pages |
| ISSN: | 1867-3678 |
| DOI: | 10.17192/es2024.0060 |