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European Science Foundation

Workshop on

Local Public Goods, Politics and Multijurisdictional Economies

This workshop will be held at EUREQua and CERMSEM, Universite Paris-1 Pantheon-Sorbonne, 06-112 Bd de l'Hopital, 75013 Paris

Main website:

July 2nd and 3rd, 2002.

The workshop will focus on three major topics: 1. Local public amenities 2. The Political Economicsof local public goods and taxation 3. Political institutions and fiscal federalism


Salvador Barbera, Autonomous University of Barcelona, Spain.

on coalition theory, networks.

Giorgio Bellettini, University of Bologna, Italy.

Lobbying for local public goods

Carlo Carraro, University of Venice,Italy.

on environment economics

Alessandra Casella (Columbia University and GREQAM, Marseille)

on European transfers.

John Conley and Antonio Rangel, University of Illinois.

Intergenerational Fiscal Constitutions: How to Protect Future Generations Using Land Taxes and Federalism

Philippe Jehiel, CERAS, Paris, France.

Dynamic Processes of Social and Economic Interactions: On the Persistence of Inefficiencies (with A. Gomes).

Ben Lockwood, Warwick University,

The political economy of asymmetric decentralization.

Fabien Moizeau, University Paris-1 Panthéon-Sorbonne.

Informational neighborhood effects and the organization of the city, (with Jean-Philippe Tropeano and Jean-Christophe Vergnaud, EUREQua)

Pierre Pestieau, Université de Liège, Belgique.

Can piecewise tax coordination be welfare improving? (with Motohiro Sato and Maurice Marchand)

Magali Verdonck, CORE and University of Louvain-la-Neuve.

Dynamics of fiscal interactions between municipalities in Belgium

1984-1996 (with Jean-François Richard and Henri Tulkens)

Leonzio Rizzo, London School of Economics,

Equalization and Tax-Competition:Theory and Evidence

Pieter Ruys, Tilburg University, the Netherlands.

Governance of Public-Private Partnerships

Christian Schultz, Institute of Economics, University of Copenhagen, Denmark.

on political polarisation and public goods

Ben Zissimos and Myrna Wooders,Warwick University, UK.

Hotelling tax/amenity competition


Amrita Dhillon, Warwick University

Anne van den Nouweland, University of Oregon

Charles de Bartolome, University of Colorado

John Weymark, Vanderbilt University

Organising committee

The three members of the organising committee for the workshop are:

Hubert Kempf (Head), EUREQua, Dept. of Economics, Université Paris-1 Panthéon-Sorbonne, Paris, France.

Cuong Le Van, CERSEM, CNRS and Université Paris-1 Panthéon-Sorbonne, Paris, France.

Myrna Wooders, Dept. of Economics and Warwick Centre for Public Economics, Warwick University, UK.

Organisation of the workshop

The workshop is planned for two days. There will be no parallel sessions, as we want to heighten the level of interaction and discussion between participants. The two days will be divided into four half-day sessions.

Each contribution will be given an hour, with a discussant. Each discussant will be allowed 15 minutes for assessing the paper. Each session will include some time for a broader discussion, introduced by a general report on the session by one participant.

Some 25 to 30 academics will attend the workshop, with some 6 to 8 PhD European students.

Project Description

The proposed workshop is planned to discuss three major topics:

1-Local public amenities

The issue of tax competition between competing political jurisdictions has been extensively explored by economists and has led to innovative research and challenging results. However, we seem to observe that competition between political units often develops along the dimension of amenities. Apart from tax incentives, local communities may offer to private individuals, investors, workers and consumers, a large array of amenities and services: from a better and cleaner environment to a 'business-friendly' attitude, from a good infrastructure network to the provision of adequate local public goods. Curiously, despite its obvious importance, this has been largely ignored by both theoreticians and applied economists interested in public economics. The few studies that have introduced amenities into the tax competition literature have found that providing amenities is just the flip side of taxation.

Very recent work involving more sophisticated game-theoretic tools and other approaches, including political economics, suggests quite different conclusions to the standard results on tax competition. Indeed, it appears that under reasonable assumptions -- for example, that firms are affected by the amenities provided -- the standard conclusions may be overturned. These studies raise new and specific issues such as the assessment of externalities, the uncertain and difficult measurement of the benefits from amenities, and the spatial spread of such amenities or services, which may not perfectly match the administrative boundaries of the relevant decision-making jurisdictions. The aim of the proposed workshop is to give some lights on these issues with the hope of both directing interest toward this research area and building on the recent results suggesting the importance of amenity competition. We anticipate that bringing together researchers who have obtained preliminary results indicating the importance of amenity competition and others who are leading experts in the area will lead to new collaborative links and also spearhead new directions of research on the issues.

2. The Political Economics of local public goods and taxation

The recent development of political economy, that is the study of the interactions of politics and economics by applying microeconomic tools and reasoning, is a major branch in current economic research. Yet, most studies concentrate on issues linked to national governments: political business cycles, the size of the central budget, the influence of special interest groups on the implementation of public programmes, for example. However, political competition is as intense between smaller political units as it is at the national level and equally important for the well-being of residents. We intend to focus on the issue of multijurisdictional politics during the workshop, allowing scholars to have a better view of the importance of this topic for economists.

3. Political institutions and fiscal federalism

A striking current political phenomenon is the development of institutions aimed at fostering cooperation between political units, be they local communities or countries. Political borders often seem as a burdensome heritage from the past and need to be modified or overcome. This is particularly relevant in the case of Europe: the issue of enlargement, the controversy between deepening or extending the European Union make clear that the European Union is at the verge of profound institutional changes. The issue of federalism is coming to the forefront on the agenda of policy-makers. Which variety of federalism should be chosen? How should federalism be constrained? What are the relevant relationships between political units and how should political institutions be designed to guide these relationships? What is the right balance between control and autonomy? How should the 'subsidiarity' principle be understood?

Economists are well equipped to contribute to the debate and help framing a consensus on this issue. The bulk of the extant literature suggests that tax competition is a major problem hampering the needed cooperation between political units but the modelling of the role of amenities and their role in tax competition is in its infancy. The notion of fiscal federalism is well-known and used extensively, even though its understanding may be questioned. Thus, it seems appropriate and timely to attack these problems with new tools available to economists, in particular those based on agency theory and game theory so as to set the problems in new contents and uncover yet-hidden difficulties deeply lying within that theoretical nexus.

These three themes are of course strongly interrelated. That is why we propose to take these themes as the three pillars of the workshop. The papers presented at the workshop will be based on analytical tools, now widely used by economists. We expect participants to draw from various theories used by economists for addressing social problems: non-cooperative game theory, agency theory, evolutionary games, and coalition theory.

We intend to have a panel of about 16 participants, 4 to 6 in each topic of the workshop. We expect that the mixing of themes and approaches, developed by leading scholars in the field of public economics, will generate significant and meaningful discussion and interactions, helping to create a new understanding of the issues linked to local public economics and politics. Besides exchanging knowledge between European researchers in this important area, and presenting an opportunity for individuals to expose their work to critical feedback we anticipate that the workshop will contribute to the current political debates in democratic countries on how to design better public institutions for the common good.

  • Salvador Barbera,

Autonomous University of Barcelona, Spain.

  • Giorgio Bellettini,

Dipartimento di Scienze Economiche
Università di Bologna
P.zza Scaravilli 2
40126 Bologna ITALY.

  • Carlo Carraro,

University of Venice, Italy.

  • Alessandra Casella,

Columbia Universityand GREQAM, Marseille
Dept of Economics, Columbia University,
420 West 118th Street, New York, NY 10027

  • John Conley,

Department of Economics
University of Illinois
Champaign, IL 61820

  • Amrita Dhillon

Dept of Economics
University of Warwick
Coventry CV4 7AL, UK

  • Philippe Jehiel,

Ecole Nationale des Ponts et Chaussées,
28 rue des Saints-Pères, Paris 75007, France.

  • Ben Lockwood

University of Warwick
Dept of Economics
University of Warwick
Coventry CV4 7AL, UK

  • Fabien Moizeau,

EUREQua, University Paris-1 Panthéon-Sorbonne,
106-112 Bd de l'Hôpital, 75013 Paris, France.

  • Pierre Pestieau,

Université of Liège, Belgique.

  • Magali Verdonck,

Department of Economic, University of Louvain,
3 place Montesquieu, B-1348 Louvain la Neuve, Belgique.

  • Pieter Ruys,

Department of Economics,
Tilburg University, PO Box 90153
5000 LE Tilburg, Netherlands.

  • Christian Schultz,

Institute of Economics,
University of Copenhagen, Denmark.

  • Ben Zissimos and Myrna Wooders,

Warwick University, UK
Dept of Economics
University of Warwick, Coventry CV4 7AL, UK