Academic Commons


Devolution, independence, and the optimal provision of public goods

Stiglitz, Joseph E.

This paper examines whether two regions should remain together within a fiscal federation, or separate, when their inhabitants have different preferences for publicly provided goods. The paper focuses on trade-offs between returns to scale in the provision of the goods, and the scope to tailor provision to the tastes of the inhabitants in each region. A general model is developed that includes, as special cases, both pure public and publicly provided goods, and regional and national public goods. We show that when there is a choice between public investment and consumption goods, there will, in general, be a bias against public consumption goods unless taxing powers are fully devolved. We provide conditions under which independence may be desirable even when the region contemplating independence is relatively small.


  • thumnail for 2015 Devolution, independence.pdf 2015 Devolution, independence.pdf application/pdf 548 KB Download File

Also Published In

Economics of Transportation

More About This Work

Academic Units
Published Here
February 5, 2019
Academic Commons provides global access to research and scholarship produced at Columbia University, Barnard College, Teachers College, Union Theological Seminary and Jewish Theological Seminary. Academic Commons is managed by the Columbia University Libraries.