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    Theoretical analysis of equalization and spatial location efficiency

    Access Status
    Fulltext not available
    Authors
    Petchey, Jeffrey
    Date
    2009
    Type
    Journal Article
    
    Metadata
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    Citation
    Petchey, J. 2009. Theoretical analysis of equalization and spatial location efficiency. Regional Studies. 43 (7): pp. 899-914.
    Source Title
    Regional Studies
    DOI
    10.1080/00343400801969500
    ISSN
    0034-3404
    School
    School of Economics and Finance
    URI
    http://hdl.handle.net/20.500.11937/22261
    Collection
    • Curtin Research Publications
    Abstract

    This paper shows that regional economies, such as federations or unitary countries with sub-national governments, may need a system of optimal inter-regional transfers to correct for various types of externalities related to factor mobility and location decisions. It is then argued that equalization schemes that take account of the differing expenditure and revenue needs of regions create a pattern of inter-regional transfers of income, but that they are inconsistent with what is required for spatial efficiency. Therefore, equalization is incompatible with the efficient spatial allocation of mobile factors of production. It is also shown that regions have an incentive to act strategically over equalization and distort their provision of local public goods.

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