An Analysis Of The Externalities From Competitions Among Local Governments During The Transformation Period

After fiscal decentralization in 1994, the competitive relationship among local governments was finally set up. In order to attract or retain all kinds of resources, exert local competition advantages, speed local development, local governments have been competing on political market,factor markets,product markets by supply of public goods and institutions. Competitions play an important role in promoting economic development of our country. But there are conflicts in local governments' competitions for markets,factors and some other "exclusive resources" . The conflicts are usually embodied when the use of a local government' power produces unwanted impacts (or costs) to other governments. Scarcity of resources is the ultimate cause of exist of externalities, and the conducts or means of competitions is the medium of it. Therefore, there must be positive or negative externalities in local governments' competition by supply of public goods and institutions. Exists of negative externalities will impede economic development from the competitions among local governments. So it is necessary to internalize negative externalities in order to make the competitions among local governments healthy.This thesis, which based on facts and economic theories, with many methods, has a basic discuss and study on the Externalities from competitions among Local Governments during the transformation period by means of economic analysis on policy making,cost-benefit analysis, combination of quantitative and qualitative analysis,combination of induction and deduction.