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Central Grants to Local Governments: A Game Theoretic Approach

Author

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  • M M Barrow

    (School of Social Sciences, University of Sussex, Falmer, Brighton, Sussex BN1 9RH, England)

Abstract
The use of game theoretic concepts is applied to the theory of central grants to local governments, when the total amount of grants distributed by central government is constrained. It is shown that inefficiencies exist and that local governments spend too much on public services relative to the efficient level. This inefficiency is shown to disappear as the number of local governments increases. Relative to the situation where there is no central constraint on the total amount of grant available, it is demonstrated that a closed-ended grant results in less expenditure on local services.

Suggested Citation

  • M M Barrow, 1986. "Central Grants to Local Governments: A Game Theoretic Approach," Environment and Planning C, , vol. 4(2), pages 155-164, June.
    • Handle: RePEc:sae:envirc:v:4:y:1986:i:2:p:155-164
    DOI: 10.1068/c040155
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    References listed on IDEAS

    as
    1. Martin McGuire, 1973. "Notes on Grants-in-Aid and Economic Interactions among Governments," Canadian Journal of Economics, Canadian Economics Association, vol. 6(2), pages 207-221, May.
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    Cited by:

    1. Ernesto Stein, 1999. "Fiscal Decentralization and Government Size in Latin America," Journal of Applied Economics, Universidad del CEMA, vol. 2, pages 357-391, November.

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