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The Economic Research Institute, Stockholm School of Economics SSE/EFI Working Paper Series in Economics and Finance

No 63:
Externalities vs Internalities: A Theory of Political Integration

Tore Ellingsen ()

Abstract: Decentralized government lead to inter-regional externalities. Whereas an integratedjurisdiction solves the externality problem, centralized government entails other costs - in particular a neglect for minority interests. The paper models formally the trade-off between these two forces in determining the optimum as well as the equilibrium design of jurisdictions. Both the relative size of regions and the distribution of tastes are shown to be important parameters of the problem.

Keywords: Jurisdictions; integration; centralization; public goods; the State; (follow links to similar papers)

JEL-Codes: H11; H73; (follow links to similar papers)

18 pages, August 1995

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This paper is published as:
Ellingsen, Tore, (1998), 'Externalities vs Internalities: A Theory of Political Integration', Journal of Public Economics, Vol. 68, pages 251-268



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