Changing the Price of Pork: the Impact of Local Cost Sharing on Legislators' Demands for Distributive Public Goods

Loading...
Thumbnail Image
Penn collection
Business Economics and Public Policy Papers
Degree type
Discipline
Subject
pork barrel spending
federal budget
cost sharing
water projects
Public Affairs, Public Policy and Public Administration
Public Economics
Funder
Grant number
License
Copyright date
Distributor
Related resources
Author
DelRossi, Alison F
Inman, Robert P
Contributor
Abstract

The provision of public services through national legislatures gives legislators the chance to fund locally beneficial public projects using a shared national tax base. Nationally financed and provided local (congestible) public goods will be purchased at a subsidized price below marginal cost and may be inefficiently too large as a consequence. An important assumption behind this inefficiency is that national legislators in fact demand more of the locally beneficial project as the local price for projects declines. This paper provides the first direct test of this important assumption using legislators' project choices following the passage of the Water Resources Development Act of 1986 (WRDA'86). We find legislators' chosen water project sizes do fall as the local cost share rises, with a price elasticity of demand ranging from −0.81 for flood control and shoreline protection projects to −2.55 for large navigation projects. The requirement of WRDA'86 that local taxpayers contribute a greater share to the funding of local water projects reduced overall proposed project spending in our sample by 35% and the federal outlay for proposed project spending by 48%.

Advisor
Date Range for Data Collection (Start Date)
Date Range for Data Collection (End Date)
Digital Object Identifier
Series name and number
Publication date
1999-02-01
Journal title
Journal of Public Economics
Volume number
Issue number
Publisher
Publisher DOI
Journal Issue
Comments
Recommended citation
Collection