Externalities vs. Internalities: A Theory of Political Integration

Stockholm School of Economics WPS 63

Posted: 12 Jun 1998

See all articles by Tore Ellingsen

Tore Ellingsen

Stockholm School of Economics - Department of Economics; Norwegian School of Economics (NHH) - Department of Economics

Date Written: August 1995

Abstract

Decentralized government lead to inter-regional externalities. Whereas an integrated jurisdiction solves the externality problem, centralized government entails other costs--in particular a neglect for minority interests. The paper models formally the trade-off between these two forces in determining the optimum as well as the equilibrium design of jurisdictions. Both the relative size of regions and the distribution of tastes are shown to be important parameters of the problem.

JEL Classification: H11, H73

Suggested Citation

Ellingsen, Tore, Externalities vs. Internalities: A Theory of Political Integration (August 1995). Stockholm School of Economics WPS 63, Available at SSRN: https://ssrn.com/abstract=4034

Tore Ellingsen (Contact Author)

Stockholm School of Economics - Department of Economics ( email )

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+46 8 736 9260 (Phone)
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Norwegian School of Economics (NHH) - Department of Economics

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N-5035 Bergen
Norway

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