search query: @freeterm federalism / total: 12
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| Author: | Fuest, C. Huber, B. |
| Title: | Can regional policy in a federation improve economic efficiency? |
| Journal: | Journal of Public Economics
2006 : FEB, VOL. 90:3, p. 499-511 |
| Index terms: | efficiency regional policy |
| Freeterms: | federalism |
| Language: | eng |
| Abstract: | In the European Union and many federal and non-federal countries, the central government pays subsidies to poor regions. These subsidies are often seen as a redistributive measure which comes at the cost of an efficiency loss. An economic rationale for regional policy based on economic efficiency is developed in this article. A model of a federation consisting of a rich and a poor region is considered. The economy is characterized by imperfect competition in goods markets and unemployment. Companies initially produce in the poor region but may relocate their production to the poor region. |
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