The second-generation theory (SGT) of fiscal federalism, which draws upon contemporary economic and industrial organization theory, hitherto focuses only on the negative benefits of public decentralization: the potentially superior ability to align perverse incentives vis-à-vis the centralized governance alternative. The SGT neglects the positive benefits of decentralization (mistake-ridden learning, flexibility, and option discovery), although the limitations of organization theory do not justify such neglect. By likening intergovernmental grants to incomplete contracts, this work shows that the SGT can include the laboratory nature of decentralization.

Cognition, incentives, and public governance: Laboratory federalism from the organizational viewpoint / Garzarelli, Giampaolo. - In: PUBLIC FINANCE REVIEW. - ISSN 1091-1421. - STAMPA. - 34:3(2006), pp. 235-257. [10.1177/1091142105285593]

Cognition, incentives, and public governance: Laboratory federalism from the organizational viewpoint

GARZARELLI, Giampaolo
2006

Abstract

The second-generation theory (SGT) of fiscal federalism, which draws upon contemporary economic and industrial organization theory, hitherto focuses only on the negative benefits of public decentralization: the potentially superior ability to align perverse incentives vis-à-vis the centralized governance alternative. The SGT neglects the positive benefits of decentralization (mistake-ridden learning, flexibility, and option discovery), although the limitations of organization theory do not justify such neglect. By likening intergovernmental grants to incomplete contracts, this work shows that the SGT can include the laboratory nature of decentralization.
experimentation; incomplete contracts; intergovernmental grants; learning; second-generation theory of fiscal federalism
01 Pubblicazione su rivista::01a Articolo in rivista
Cognition, incentives, and public governance: Laboratory federalism from the organizational viewpoint / Garzarelli, Giampaolo. - In: PUBLIC FINANCE REVIEW. - ISSN 1091-1421. - STAMPA. - 34:3(2006), pp. 235-257. [10.1177/1091142105285593]
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11573/443880
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