Public Sector Economics

Table Of Contents

PART I INTRODUCTION

1 (44)

The Public Sector

3 (22)

Politics and Economics

4 (2)

Public Choice or Benevolent Despot?

5 (1)

The Activities of Government

6 (10)

Federal, State, and Local Governments

6 (2)

Federal Expenditures

8 (3)

The Federal Deficit and Interest Expenditures

11 (1)

Federal Government Revenues

12 (2)

The Growth of Government in the Twentieth Century

14 (1)

International Comparisons

15 (1)

Conclusion

16 (1)

Questions for Review and Discussion

17 (8)

Principles for Analyzing Government

25 (20)

The Market Economy

26 (1)

Economic Efficiency and the Competitive Market

26 (1)

The Role of Government

27 (2)

The Market System and Individual Rights

29 (2)

The Government as Protector of Rights

29 (1)

The Government as Violator of Rights

30 (1)

The Public Interest

31 (2)

The Greatest Good for the Greatest Number

31 (1)

Utilitarianism

32 (1)

The Pareto Criteria

33 (4)

Market Exchange and the Pareto Criteria

35 (1)

Political Exchange and the Pareto Criteria

35 (1)

Limitations of the Pareto Criteria

36 (1)

Other Measures of the Public Interest

37 (3)

Potential Compensation

37 (1)

The Social Welfare Function

38 (1)

Cost-Benefit Analysis

39 (1)

Positive and Normative Economics

40 (2)

Normative Analysis and the Public Interest

41 (1)

Equity and Efficiency: The Goals of Public Policy

42 (1)

Conclusion

43 (1)

Questions for Review and Discussion

44 (1)

PART II ECONOMIC EFFICIENCY

45 (84)

Property Rights and Economic Efficiency

47 (21)

Property Rights

47 (1)

Poorly Defined Property Rights

48 (2)

Overuse of Resources with Poorly Defined Property Rights

50 (2)

Property Rights and the Protection of Endangered Species

51 (1)

Property Rights and Resource Allocation

51 (1)

The Coase Theorem

52 (3)

Income Effects

53 (1)

The Reciprocal Nature of the Problem

54 (1)

Do Property Rights Have to Be Predefined?

54 (1)

Small Numbers and Large Numbers

55 (1)

Small Numbers Mean Low Transactions Costs

55 (1)

Large Numbers Mean High Transactions Costs

55 (1)

Transactions Costs and Property Rights

56 (1)

The Common Pool Problem

56 (2)

Common Ownership and Overuse

57 (1)

Solutions to the Common Pool Problem

57 (1)

Government versus Private Ownership

58 (4)

Government Ownership and Resource Allocation

58 (1)

Public Policy and Government Ownership

59 (1)

Communal Ownership in Centrally Planned Economies

60 (1)

The Incentives of Government Managers

61 (1)

Property Rights and Entitlements

62 (1)

Land Use Planning: An Application of Property Rights Theory

62 (4)

Property Rights and the Law of Nuisance

63 (1)

The Justification for Zoning Laws

63 (1)

Restrictive Covenants

64 (1)

Twenty-First Century Land Use Planning

65 (1)

Conclusion

66 (1)

Questions for Review and Discussion

67 (1)

Externalities

68 (22)

The Definition of an Externality

68 (1)

Public Policy toward Externalities

69 (1)

Negative Externalities

70 (1)

Negative Externalities in a Supply and Demand Framework

71 (4)

Private Actions to Correct an Externality

72 (1)

Corrective Taxation of an Externality

72 (1)

What Should Be Taxed?

73 (1)

Should Compensation Be Paid to Those Who Are Harmed?

74 (1)

Taxation versus Regulation

75 (3)

The Politics of Quotas versus Taxes

77 (1)

Incentives for Pollution Reduction with Regulation versus Taxation

77 (1)

Marketable Pollution Rights

78 (2)

Marketable Rights in the Clean Air Act of 1990

79 (1)

Politics and Pollution Control

79 (1)

The Optimal Amount of Pollution

80 (1)

Positive Externalities

81 (2)

Excess Burden and Excess Benefit

83 (1)

Technological and Pecuniary Externalities

83 (2)

Marginal and Inframarginal Externalities

85 (3)

Negative Inframarginal Externalities

86 (1)

Positive Inframarginal Externalities

87 (1)

Conclusion

88 (1)

Questions for Review and Discussion

89 (1)

Public Goods

90 (18)

Collective Consumption Goods

91 (4)

The Argument for Public Sector Production

91 (2)

The Argument for Private Sector Production

93 (1)

Congestion of Collective Consumption Goods

94 (1)

The Optimal Output of a Collective Consumption Good

95 (3)

Vertical Summation of Individual Demand Curves

95 (1)

Lindahl Pricing

96 (2)

Pure and Impure Collective Consumption Goods

98 (1)

Public Policy toward Collective Consumption Goods

99 (1)

Nonexcludability

100 (2)

Nonexcludability as a Prisoners' Dilemma

100 (2)

Exclusion Costs and Public Sector Production

102 (1)

Nonexcludability and Collective Consumption in Public Goods

102 (2)

Public Policy toward Public Goods

104 (2)

Conclusion

106 (1)

Questions for Review and Discussion

107 (1)

The Economic Role of the State

108 (21)

Protection of Rights

109 (1)

Protection of Rights in a Market Economy

109 (1)

How Much Protection Is Optimal?

110 (1)

Government Production

110 (1)

Government Regulation

111 (1)

Information and Regulation

111 (1)

Politics and Regulation

112 (1)

The Capture Theory of Regulation

112 (6)

Special Interests versus the General Public

112 (1)

The Regulatory Agency as a Cartel

113 (1)

The Equilibrium Level of Regulation

114 (2)

The Transitional Gains Trap

116 (1)

Regulation in Perspective

117 (1)

Redistribution

118 (2)

Reasons for Government Redistribution

118 (1)

Politics and Redistribution

119 (1)

Stabilization

120 (1)

Can the Government Perform These Functions?

120 (1)

Information Problems

120 (1)

Policy Conflicts

121 (1)

Will the Governments Perform These Functions?

121 (1)

The Free Rider Problem

122 (1)

Free Riding and Shirking

122 (1)

Free Riding and Understatement of Demand

123 (1)

The Holdout Problem

123 (2)

Solutions to the Holdout Problem

124 (1)

Eminent Domain

124 (1)

Unanimity and Holdouts

125 (1)

Consent and Coercion

125 (1)

Conclusion

126 (1)

Questions for Review and Discussion

127 (2)

PART III AN ECONOMIC ANALYSIS OF DEMOCRACY

129 (70)

A Theory of Collective Action

131 (23)

Collective Action and Collective Decision Making

131 (2)

Collective Action

132 (1)

Individual Preferences and Group Preferences

132 (1)

The Pareto Principle and the Rule of Unanimity

133 (1)

Optimal Departures from Unanimity

134 (3)

Decision-Making Costs

134 (1)

External Costs

135 (1)

The Optimal Decision Rule

136 (1)

Optimal Club Output and Club Size

137 (3)

The Optimal Sharing Group

139 (1)

Representative Democracy

140 (1)

The Economic Model of Democracy

141 (1)

Optimal Constitutional Rules

142 (4)

The Rawlsian Veil of Ignorance

143 (1)

Renegotiation of the Contract

143 (2)

Consensus and Constitutional Rules

145 (1)

Rules and Outcomes: A Procedural Theory of Justice

145 (1)

Applying the Procedural Theory of Justice

146 (1)

The Evolution of Cooperation

146 (4)

Axelrod's Tournament

147 (1)

Implications of Axelrod's Tournament

148 (1)

The Results of Human Action but Not of Human Design

149 (1)

The Normative Basis for Government

150 (1)

Conclusion

151 (1)

Questions for Review and Discussion

152 (2)

Public Sector Demand

154 (21)

The Median Voter Model

155 (3)

The Committee Process

155 (1)

A Referendum Model

156 (1)

The Median Voter in a Representative Democracy

157 (1)

Representative Democracy

158 (5)

The Decisive Median Voter

159 (1)

Candidates Tend to Adopt Similar Platforms

159 (1)

Extreme Candidates

160 (1)

The Equilibrium Number of Political Parties

161 (2)

The Cyclical Majority

163 (3)

Single-Peaked Preferences

163 (1)

Cycles and Political Institutions

164 (2)

Information and Incentives

166 (4)

The Political Marketplace

166 (1)

Rational Ignorance of Voters

166 (1)

Special Interests

167 (1)

Special Interests versus the Public Interest

168 (1)

The Demand for Immediate Results

169 (1)

Public Sector Demand in Theory and in the Real World

170 (1)

The Median Voter Model and Political Competition

170 (1)

Economic Efficiency and the Median Voter

171 (1)

Public Sector Efficiency

171 (1)

Efficiency in the Real World

172 (1)

Conclusion

172 (1)

Questions for Review and Discussion

173 (2)

Supply and Demand in Political Markets

175 (24)

Special Interests and Government Programs

176 (3)

Special Interests and Political Exchange

176 (2)

Representation of Interests and the Organization of Congress

178 (1)

Logrolling and Political Exchange

179 (2)

Logrolling and Special Interests

180 (1)

Logrolling and Economic Efficiency

180 (1)

Agenda Control

181 (3)

A Referendum Example

182 (1)

Agenda Control in the Real World

183 (1)

Rent Seeking

184 (3)

The Welfare Costs of Rent Seeking

186 (1)

Public Sector Suppliers

187 (3)

Incentives in Bureaucracy

188 (1)

Utility and Budget Maximization in the Public Sector

188 (1)

The Public Interest and Budget Maximization

189 (1)

The Bureaucrat's Maximand

189 (1)

The Public Sector Bargaining Process

190 (3)

The Bureau and the Legislature

190 (1)

The Bureau's Bargaining Advantage

190 (1)

The Bureaucratic Bargaining Process

191 (2)

The Government as an Interest Group

193 (1)

Fiscal Federalism

193 (2)

Federalism and Special Interests

193 (1)

Federalism and Consumer Choice

194 (1)

Comparisons with Other Governments

194 (1)

Production at Lower Levels of Government

195 (1)

Conclusion

195 (1)

Questions for Review and Discussion

196 (3)

PART IV TAXATION

199 (150)

Positive Principles of Taxation

201 (23)

Tax Shifting

202 (3)

A Unit Tax Placed on Suppliers

202 (1)

A Unit Tax Placed on Demanders

203 (1)

A Tax on Suppliers versus a Tax on Demanders

204 (1)

Elasticities and Tax Incidence

205 (3)

Perfectly Elastic or Perfectly Inelastic Supply

206 (1)

Shifts in the Tax Burden

207 (1)

The Welfare Cost of Taxation

208 (3)

The Excess Burden as a Cost of Taxation

210 (1)

Lump Sum Taxes

210 (1)

Excess Burden and Individual Choice

211 (4)

Inelastic Labor Supply and the Welfare Cost of an Income Tax

213 (1)

Utility Functions and Excess Burden

214 (1)

Minimizing the Excess Burden of Taxation

215 (3)

The Ramsey Rule

216 (1)

The Marginal Cost of Public Spending

217 (1)

Additional Costs of the Tax System

218 (2)

Compliance Costs

219 (1)

Administrative Costs

219 (1)

Political Costs

219 (1)

Earmarked Taxes

220 (2)

General Fund Financing versus Earmarking

220 (1)

The Advantages and Disadvantages of Earmarking

221 (1)

Conclusion

222 (1)

Questions for Review and Discussion

223 (1)

Principles of Tax Policy

224 (19)

The Benefit Principle

225 (2)

Efficiency and the Benefit Principle

225 (1)

Actual Taxes and the Benefit Principle

226 (1)

The Ability-to-Pay Principle

227 (2)

Ability to Pay and the Benefits of Public Expenditures

227 (1)

Ability to Pay and the Public Interest

228 (1)

Implementing Ability to Pay

229 (3)

Horizontal Equity

229 (2)

Vertical Equity

231 (1)

Progressive, Proportional, and Regressive Taxes

232 (2)

Sumptuary Taxes

234 (2)

Sumptuary Taxes and Excess Burden

234 (1)

Sin Taxes and Healthy Living

235 (1)

Politics and Tax Policy

236 (3)

Special Interests and Taxation

236 (1)

Federal versus State and Local Taxation

237 (1)

Tax Reform

238 (1)

Tax Policy in the Real World

239 (1)

Equity and Efficiency

239 (1)

Individual Taxes versus the Tax System

239 (1)

Conclusion

240 (2)

Questions for Review and Discussion

242 (1)

Taxes on Economic Transactions

243 (26)

Excise Taxes, Unit Taxes, and Ad Valorem Taxes

243 (4)

Unit Taxes versus Ad Valorem Taxes

244 (1)

Advantages and Disadvantages of Unit Taxes and Ad Valorem Taxes

245 (1)

Revenues from Excise Taxes

246 (1)

User Charges

247 (4)

User Charges and Economic Efficiency

247 (1)

User Charges and Demand Revelation

247 (1)

User Charges and Equity

248 (1)

Approximating User Charges in the Real World

249 (1)

User Charges as Taxes

249 (1)

User Charges and Public Enterprise

249 (1)

Revenues from User Charges

250 (1)

Import and Export Taxes and Quotas

251 (5)

Import and Export Taxes and Revenue Generation

251 (1)

Import Taxes and Trade Restrictions

252 (2)

Quotas versus Tariffs

254 (1)

Trade Agreements

255 (1)

General Sales Taxes

256 (5)

A General Sales Tax as a Consumption Tax

256 (1)

Is the Sales Tax Regressive?

257 (1)

Sales Taxes and the Internet

258 (1)

Income and Substitution Effects

259 (1)

Can Leisure Be Taxed?

260 (1)

Turnover Taxes

261 (1)

The Value Added Tax

261 (5)

The Value Added Tax versus the Sales Tax

262 (2)

The Value Added Tax in the European Union

264 (1)

The Visibility of the Tax

265 (1)

A Value Added Tax in the United States?

266 (1)

Conclusion

266 (1)

Questions for Review and Discussion

267 (2)

The Taxation of Income

269 (20)

Sales, Consumption, and Income Taxes

270 (2)

Sales and Consumption Taxes

270 (1)

Consumption and Income Taxes

271 (1)

Taxes on Saving

271 (1)

Definitions of Income

272 (4)

In-Kind Benefits

272 (1)

Changes in Wealth

273 (1)

Imputed Rental Income

274 (2)

The Income-Leisure Trade-Off

276 (2)

Taxed versus Nontaxed Activities

276 (1)

Income versus Leisure

276 (2)

The Backward-Bending Supply Curve of Labor

278 (3)

Tax Rates and Tax Revenues

281 (3)

Rates and Revenues in the 1980s

282 (1)

Taxes Paid by Income Groups for Three Decades

283 (1)

Average and Marginal Tax Rates

284 (2)

Marginal Tax Rates and Excess Burden

285 (1)

The Flat Tax

285 (1)

The Double Tax on Saving

286 (1)

Conclusion

287 (1)

Questions for Review and Discussion

287 (2)

Personal Income Taxation in the United States

289 (19)

A Brief History of the U.S. Income Tax System

289 (5)

Federal Income Tax Rates

290 (1)

Withholding

291 (1)

Tax Reform in 1964, 1986, and 2002

292 (2)

Calculating Taxable Income

294 (4)

Computation of Income

294 (1)

Exemptions

295 (1)

Deductions

295 (2)

Tax Computation

297 (1)

Tax Credits

298 (1)

Broadening the Tax Base

298 (2)

The Alternative Minimum Tax

300 (1)

Tax Expenditures

300 (2)

Inflation, Indexation, and Bracket Creep

302 (2)

Individual Retirement Accounts

304 (1)

The Roth IRA

305 (1)

Other Tax-Deferred Savings Methods

305 (1)

Conclusion

305 (1)

Questions for Review and Discussion

306 (2)

Taxes on Business Income and Wealth

308 (25)

The Corporate Income Tax

308 (4)

Characteristics of the Corporate Income Tax

309 (1)

Interaction between Corporate and Personal Income Taxes

310 (1)

Fringe Benefits

311 (1)

Depreciation

312 (1)

The Burden of the Corporate Income Tax

313 (4)

Competitive Markets

314 (1)

Monopoly

315 (2)

The Income Tax and the Return to Bearing Risk

317 (1)

The Taxation of Capital Gains

317 (3)

Unrealized Capital Gains

318 (1)

Capital Gains Taxation as a Double Tax

318 (1)

Inflation and Capital Gains

319 (1)

Wealth and Property Taxation

320 (1)

Incentives in Income Taxes and Wealth Taxes

321 (1)

Unrealized Capital Gains and Wealth Taxation

321 (1)

The Property Tax

322 (2)

Locational Decisions and the Property Tax

322 (1)

Property Tax Limitations

323 (1)

Differing Property Tax Rates

324 (1)

Site Value Taxation

324 (3)

Site Value Taxation versus Property Taxation

325 (1)

Site Value Taxation and the Value of Land

326 (1)

The Inheritance Tax

327 (2)

Avoiding the Tax

327 (1)

Justifications for an Inheritance Tax

328 (1)

Severance Taxes

329 (1)

Conclusion

329 (2)

Questions for Review and Discussion

331 (2)

The Tax System in the United States

333 (16)

Federalism and the Tax System

334 (1)

Federal Taxes

335 (1)

Intergovernmental Revenues

336 (1)

State and Local Taxes

337 (2)

The Progressivity of the Tax System

339 (2)

Political Influences on the Tax System

341 (1)

Tax Reform

342 (2)

Comprehensive versus Piecemeal Tax Reform

343 (1)

Revenue-Neutral Tax Reform

343 (1)

Taxes in Isolation and the Tax System

344 (1)

Conclusion

345 (1)

Questions for Review and Discussion

346 (3)

PART V GOVERNMENT EXPENDITURE PROGRAMS

349 (150)

The Government Budgeting Process

351 (18)

The Federal Budgeting Process

352 (2)

Budgetary Reform in the Twentieth Century

352 (1)

The President's Budget

352 (1)

The Congressional Budget

353 (1)

Incrementalism

354 (2)

The Effects of Special Interests

354 (1)

Incrementalism and Efficiency

355 (1)

Politics and the Federal Budget

356 (1)

Entitlements

357 (1)

Off-Budget Expenditures

357 (1)

Program Budgets versus Line Item Budgets

358 (2)

The Planning-Programming-Budgeting System

359 (1)

Cost-Benefit Analysis

360 (3)

Enumerating the Options

360 (1)

Enumerating the Costs and Benefits

360 (1)

Converting the Costs and Benefits to Dollar Terms

361 (1)

Cost-Benefit Analysis as a Decision-Making Tool

362 (1)

Cost-Benefit Analysis and the Public Interest

362 (1)

The Discount Rate

363 (2)

Present Value Measurement of Costs and Benefits

363 (1)

Choosing the Right Discount Rate

364 (1)

Average and Marginal Benefits

365 (1)

Taxing and Spending

366 (1)

Conclusion

367 (1)

Questions for Review and Discussion

368 (1)

Taxation and Redistribution

369 (18)

Principles of Taxation and Redistribution

369 (1)

Equality as a Social Goal

370 (2)

Equality of Opportunity and Equality of Results

372 (1)

Fair Rules and Fair Outcomes

372 (1)

The Goal of Equality

373 (2)

Utilitarian Justifications

373 (1)

Utility Maximization of Those Least Well Off

374 (1)

Charity as a Collective Consumption Good

375 (1)

Charitable Giving as a Pareto Superior Move

375 (1)

The Incentive to Free Ride

375 (1)

Redistribution as Insurance

376 (1)

Progressive Taxation and Wage Adjustment

376 (2)

Distributive Government

378 (2)

The Incentive Structure of Government Programs

378 (2)

Redistributive Programs and the Poor

380 (2)

Incentives to Earn Less Income

380 (1)

The Hard-Core Poor and the Marginal Poor

381 (1)

Growing Dependency on Government Programs

381 (1)

The Politics of Redistribution

382 (3)

Administrator Incentives

383 (1)

The Goals of Redistribution

384 (1)

Conclusion

385 (1)

Questions for Review and Discussion

386 (1)

Government Redistribution Programs

387 (19)

Cash versus Payment in Kind

387 (3)

Cash Payments and Utility Maximization

388 (1)

The Rationale for In-Kind Payments

389 (1)

The Negative Income Tax

390 (4)

The Incentive to Substitute into Leisure

391 (1)

Redistribution and the Income of the Poor

392 (1)

The Excess Burden of a Negative Income Tax

393 (1)

The Earned Income Tax Credit

394 (1)

Temporary Aid to Needy Families

394 (2)

Food Stamps

396 (3)

Housing Subsidies

399 (2)

Public Housing

399 (1)

Rent Subsidies

400 (1)

Homelessness

401 (2)

Conclusion

403 (1)

Questions for Review and Discussion

404 (2)

Social Security

406 (21)

The Social Security Payroll Tax

407 (2)

Contributions

407 (2)

The Structure of the Tax

409 (1)

The Burden of the Payroll Tax

409 (1)

Tax Shifting and the Payroll Tax

409 (1)

The Visibility of the Payroll Tax

410 (1)

Coverage

410 (2)

Eligibility

411 (1)

The Redistributive Nature of the Program

411 (1)

The Pay-as-You-Go System of Financing

412 (1)

The Viability of Pay-as-You-Go

413 (1)

The Political Determination of Benefits and Costs

413 (1)

Social Security and Capital Accumulation

414 (2)

Funded Pensions

415 (1)

Unfunded Pensions

415 (1)

The Growth of the Social Security Program

416 (1)

Social Security as an Investment

417 (4)

The Structure of the System

420 (1)

Future Tax Rates

420 (1)

Growth in Income

420 (1)

The Future of Social Security

421 (1)

Proposals for Reform

421 (4)

Insurance and Welfare

421 (1)

Raising the Retirement Age

422 (1)

Eliminating Pay-as-You-Go

422 (1)

Financing the Program's Deficit from General Revenues

423 (1)

The Cost of the Imbalance in Social Security Revenues and Expenditures

424 (1)

Conclusion

425 (1)

Questions for Review and Discussion

426 (1)

Education

427 (15)

The Growth in Education: Students and Expenditures

427 (3)

Rationales for Government Involvement

430 (2)

Education Produces a Positive Externality

430 (1)

Socialization

430 (1)

Fairness

431 (1)

The Level of Government Financing

432 (1)

Competition, Vouchers, and School Choice

433 (4)

Vouchers

433 (1)

Public School Choice

434 (1)

Charter Schools

435 (1)

Homeschooling

436 (1)

School Choice at the College Level

436 (1)

The Payoff to Education

437 (3)

Income Advantages to Education

437 (1)

Signaling versus Human Capital

438 (1)

Education and Productivity

439 (1)

Conclusion

440 (1)

Questions for Review and Discussion

440 (2)

Health Care

442 (18)

Rationales for Government Involvement

442 (1)

Public Health

443 (2)

Public versus Private Health

444 (1)

Public Health Policy

444 (1)

Health Insurance

445 (1)

Moral Hazard and Adverse Selection

446 (1)

Health Insurance Incentives

447 (3)

Deductibles and Copayments

448 (1)

Health Maintenance Organizations (HMOs)

448 (1)

Hospital Reimbursement for Insured Expenses

449 (1)

The Evolution of Twentieth-Century Health Care

450 (1)

Government Health Care Programs

451 (3)

Medicare

451 (1)

Medicaid

452 (2)

Health Care Reform

454 (3)

Universal Coverage

454 (1)

The Canadian System

454 (1)

Medical Savings Accounts

455 (1)

Employer Mandates

456 (1)

Pay or Play

456 (1)

Interest Groups and Health Care Reform

457 (1)

Conclusion

457 (2)

Questions for Review and Discussion

459 (1)

National Defense

460 (16)

The Level of Military Expenditures

461 (7)

The Marginal Benefits of Additional Expenditures

462 (2)

The Arms Race and the War on Terror

464 (1)

Military Alliances

465 (1)

Economic Warfare

466 (1)

Do Democracies Spend Enough?

467 (1)

Military Procurement Contracts

468 (2)

Fixed Fee

468 (1)

Cost Plus Fixed Fee

469 (1)

Cost Plus Percentage Fee

469 (1)

Cost Plus Incentive Fee

469 (1)

The Perfect Contract

470 (1)

Procurement versus Life-Cycle Costs

470 (1)

Procurement and Maintenance

470 (1)

Getting the Foot in the Door

471 (1)

Conscription versus Volunteers

471 (2)

Conclusion

473 (1)

Questions for Review and Discussion

474 (2)

The Federal System of Government

476 (23)

The Theoretical Foundations of Federalism

476 (3)

Economies of Scale

477 (1)

Coordination of Large Programs

477 (1)

Public Goods

478 (1)

Externalities

478 (1)

The Optimal Sharing Group

478 (1)

Intergovernmental Competition

479 (3)

Intergovernmental Competition and Consumer Choice

479 (1)

Mobility and Intergovernmental Competition

480 (1)

Other Governments as a Basis for Comparison

481 (1)

The Roles of Different Levels of Government

482 (2)

Special Interests and Government Size

484 (1)

Federalism and Special Interests

484 (1)

Centralization and the Cartelization of Governments

485 (2)

Competition in the Public Sector

486 (1)

The Number of Governments

486 (1)

Regulations and Grants

487 (1)

Regulation and Competition

488 (1)

Grants and Competition

488 (1)

Intergovernmental Revenue

488 (7)

General Grants

489 (1)

Categorical Grants

490 (2)

Matching Grants

492 (2)

The Flypaper Effect

494 (1)

Tax Issues and Local Governments

495 (1)

Taxes Paid by Immobile Factors

495 (1)

Capitalization of Debt

495 (1)

Capitalization of Public Goods

496 (1)

Deductibility of State and Local Taxes

496 (1)

Conclusion

496 (2)

Questions for Review and Discussion

498 (1)

Glossary 499 (8)

Index 507