Interjurisdictional compensation can provide an effective method of achieving an optimal provision of public goods in an independent system of local governments, only if all the major side effects of public goods are included in its computation. Previous studies have suggested compensation...

This paper analyzes the keep‐versus‐replace decision whee labor shortages act as production bottlenecks, which can be lessened to some degree by employing new labor saving equipment. Additional realism is brought to the analysis by explicit consideration of product demand, learning, and...