%0 Journal Article
%T Centralization Trade-off with Non-Uniform Taxation
%A Martin Gregor
%A Peter Tuchy¨ľa
%J AUCO Czech Economic Review
%D 2007
%I Charles University in Prague
%X When local public goods are provided by a centralized authority, spillovers are internalized, but heterogeneity in preferences may be suppressed. Besley and Coate (2003) recently examined this classic trade-off for a uniform tax regime with strategic delegation. Here, we extend their approach by allowing for a non-uniform tax regime. We find that centralization with nonuniform taxation unambiguously increases welfare in comparison to uniform-tax centralization. With non-cooperative legislators coming from symmetric districts, our centralization dominates decentralization for any degree of spillovers. In other cases, non-uniform taxation at least improves the odds of centralization, if measured by a utilitarian yardstick.
%K decentralization
%K taxation
%K local public goods
%U http://auco.fsv.cuni.cz/storage/23_2007_03_223.pdf