The Assignment Problem in Federal Structures
This paper contains a simple model of the assignment of functions among the jurisdictional levels that make up the public sector. The model rests on the notion that it is possible to classify the activities of individuals and governments who participate in the public sector and to impute costs—sometimes called transaction costs—to these activities. Following a description of the nature of these activities and costs, it is argued that an equilibrium assignment table, i.e. a cross-classification of functions on jurisdictional levels, can be determined. The paper then notes how misassignment problems can be dealt with by the use of interjurisdictional grants.
KeywordsTransportation Income Sewage Expense Clarification
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