Let’s (De)Centralize Public Goods!

Should we favor large metropolises over small communities? According to standard economic theory, the answer is yes, since centralizing helps reduce expenses. However, when public authorities lack some of the relevant information, opting for a federal structure that allows redistribution between many small towns may be the way to go. Researchers Nicolas Gravel and Michel Poitevin demonstrate this by studying the distribution of public and private goods in both federal and centralized structures.