Harmonization and Side Payments in Political Cooperation
分析两个地区在存在外部性时，通过谈判实现内部化的博弈，探讨统一政策与补偿支付的有效性，以及何时禁止补偿支付更优，为财政联邦主义中的“统一性假设”提供理论基础。
For two districts or countries that try to internalize externalities, I analyze a bargaining game under private information. I derive conditions for when it is efficient with uniform policies across regions—with and without side payments—and when it is efficient to prohibit side payments in the negotiations. While policy differentiation and side payments allow the policy to better reflect local conditions, they create conflicts between the regions and, thus, delay. The results also describe when political centralization outperforms decentralized cooperation, and they provide a theoretical foundation for the controversial “uniformity assumption” traditionally used by the fiscal federalism literature.