Analysis Of Local Public Services, The Supply Of Space Factor Mobility

Most traditional studies on the supply of local public services focuses on the technical characteristics((non-exclusive and non-competitive). Although these studies play an important role in the research of effective supply of public services of local governments, it is difficult for them to explain completely and reasonably the action choices of local governments and the results of regional economic development in real life because of the restrictions of research methods and many other causes. In the late 20th century, people realize that in a modern society of economic integration, effective delivery of public services is not only the local governments' targets, but also the local governments' instruments or tools to make regional interests largest. Over the past two decades, with the rapid development and extensive application of Spatial Economic Theory which regards revealing endogenous non-balanced strength of regional economic development as the main objective, with the development of Intergovernmental Tax Competition Theory as a milestone, the research of governmental actions in regional economy has been deepened, which greatly promoted the research of local governmental actions and policies.Based on the research of intergovernmental competition in Spatial Economic Theory, this paper, different from popular discussions on mobile elements which start to tackle problems from the financial (tax) competition and the impact of the supply of public services, uses the method of spatial economic analysis, establishes flowing factors as a focal point, studies the relationship between local governmental public service supply and agglutinative factors. After the analysis of local public services, flowing factors, competition between governments and other basic categories, this paper systematically discusses the relationship between local public service supply and factor income level with a guidline from "a single region" to the "two regions, two elements" and then to "two regions, two elements and two departments ".Thus we provide theoretical explanation and policy ground for local governments on how to form "economic agglomeration effect of factors" for regional economic development and how to improve public services in accordance with the requirements of the flowing factors.The study ideas above have decided the basic theoretical framework and main contents of this paper. Firstly, based on Barro's economic growth model regarding the relationship between economic growth and the government, with the introduction of the variable of factor productivity (yield),a Single Region Model has been established to discuss the relationship between public services and factor productivity. This model not only proves that the different types of public services and factor income rate show a positive correlation, but also that governmental public services have a positive effect on the level of factor income. This has laid a solid foundation for the follow-up study. Secondly, according to the standard spatial economic analysis,with the preposition that whether the factors flow or not depends on the difference of the factor income levels between regions, a Nonlinear General Equilibrium Model has been formed on "two regions, two sectors (public and private sector), two elements (mobiling elements and non-mobiling elements)". It is proved that under symmetric regions improving local governmental public-services has a positive impact on the flow of factors and the trend of change is regressive, no matter whether local transaction cost is considered or not. The method of numerical simulation is used in discussing different roles of different variables, such as the government scale,commodities elasticity of substitution and the transaction cost, in the spatial distribution; and then further analysis has been made to discuss the relations of the flow of factors, financial competition, and the efficiency of resource allocation. In order to discuss the relation of the flow of capital and labor, public services and tax competition, a "two-region, two-factor" model is established on the basis of Cobb-Douglas production function to discuss the effect of public services and taxation policies on the flow of different factors. And at the same time, according to the actual flow of capital and labor in China, the effects of public services and tax policies are also discussed while the capital is away from the owners and labourers away from their residences. Thirdly, in view of the "crowdness" of local public services,the paper proposes a concept of supply flexiblility. On the basis of the "two regions, two elements, two departments" model,we proved the existance of supply flexibility of the flow of regional factors under general equilibrium state. Specific analysis are made to discuss the effect of the factor yield on the flexibility of public services(supply of life public services and productive public services respectively). On the basis of the "two-region, two-factor" model, the supply flexibility of the rate of capital return and labor income level on public services is accessed.Although spatia economic analysis did not obtain satisfactory results and successful experience in the aspect of empirical analysis,this paper uses comparative analysis and econometric statistical models to make empirical analysis on the scale of local governmental public-services,financial competition and the supply flexibility in China. These empirical analysis gives us an approximate description of the flow of factors between regions and the use of local governmental public-services,but they are able to verify the above basic conclusions of the study.