Barrow M M, 1989, "Local authority responses to grants: different types of response and equilibrium" Environment and Planning C: Government and Policy 7(3) 313 – 320
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Local authority responses to grants: different types of response and equilibrium
M M Barrow
Received 12 November 1988; in revised form 21 April 1989
Abstract. Game theoretic techniques are used to examine the case of local authorities facing a system of closed-ended central government grants. A diagrammatic exposition of the results from a previous paper is provided, and the results extended to cover alternative types of equilibrium. It is shown that local government behaviour may be Pareto inefficient in response to grants, the inefficiency being manifested in too high a level of local government spending. It is also shown that authorities which try to protect their local tax rate may be at a disadvantage relative to those which make a commitment to high spending.
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