Ex ante free mobility, ex post immobility, and time consistency in a federal system

This paper examines regional population distribution when there is an inter regional transfer policy without commitment. We introduce explicitly the fo llowing time structure of actions. Individuals assumed to be identical make decisions on locational choices freely ex ante, but are immobile ex post. The fiscal policies of the local governments and the central government are implemented after individuals' migration decisions. The basic result is th at locally stable no-conunitment equilibria are single-community equilibria when there is a pure local public good. We then illustrate the possibility for the interregional transfer policy to reduce the efficiency of populati on distribution. (C) 2001 Elsevier Science BY. All rights reserved.