COLLUSION IN LOCAL PUBLIC WORKS*
建立了一个地方公共工程中的合谋分层模型，分析地方政府与建筑商如何通过虚报成本骗取联邦补贴，并探讨最优补贴政策及项目取舍问题。
A hierarchical model of collusion in local public works is presented. A local authority plans to undertake a project, delegating its construction to a construction firm. Both of them know the project's cost. However, the federal government decides whether to subsidize the project without knowing its cost. Therefore, the local authority and the constructor may agree to misreport their private information, in order to benefit from the allocation of federal grants. We show that different collusive behaviors may emerge. Then, we characterize the optimal federal grant policy. Finally, we investigate when constructing (shutting down) useless (valuable) projects is optimal.