Chapter_22_v2

Chapter_22_v2 - Part 6 Multigovernment Public Finance...

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Part 6 – Multigovernment Public Finance Chapter 22 – Public Finance in a Federal System 1. Federal safety regulation may impart economies of scale or a lower cost of compliance than state-by-state systems for companies. It would also impart a lower cost of policing. There is little reason to expect that states would have consistently different populations so that the preferences for consumer safety would be different. 2. From a Tiebout perspective, standardizing taxes would be inefficient as people would not be able to find the mix of public services and taxes that best suits them. 3. This is a perfect reflection of the Tiebout model, although it is an extreme measure. A refitted oil rig would have no services provided by the government, and the people living there would pay no taxes. Alternatively, if there was something like a government on the oil rig, the provision of public goods would be perfectly tailored to the preferences of the inhabitants. The people who chose to live on the rig would lose the economies of scale
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This document was uploaded on 02/14/2012.

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Chapter_22_v2 - Part 6 Multigovernment Public Finance...

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