Competitive Governments, Globalization, and Equalization Grants

The competition that permeates the public sector acts as a force to discipline public sector actors. But it also serves to build links between the volume of goods and services supplied by public bodies and the prices that citizens must pay for them. Globalization, by permitting a greater mobility of capital, makes it possible for larger business corporations to become more effective oligopsonists when bargaining with governments for the goods and services they need, thus weakening the links between the things provided to citizens and the prices the latter must pay. Equalization payments, by permitting more effective intergovernmental competition, reduce the negative effects of globalization on the links that competition forges.