What are interjurisdictional externalities? Identify the problems created for a federal system by interjurisdictional externalities.

Expert Solution

Interjurisdictional externalities can be defined as the different types of costs and benefits experienced by the citizens who are the citizens of other political jurisdictions resulting from the goods and services of local government. In order to have an effective federal system operation, different types of issues are created by these Interjurisdictional externalities. The main reasons behind these issues are that the costs or benefits which are received by these externalities are not restricted to any geographic boundary of any political jurisdiction.

In fact, Tiebout Model also experiences a number of difficulties due to Interjurisdictional externalities as because of these externalities, the local citizens are forced to take decisions on the basis of insufficient data and information and thus they are unable to take an informed decision. Tiebout Model explains that the local taxes should be as per the services offered by the local government.

keosha answered 6 months ago

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