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The Strathprints institutional repository is a digital archive of University of Strathclyde research outputs. Strathprints provides access to thousands of Open Access research papers by University of Strathclyde researchers, including those from the School of Psychological Sciences & Health - but also papers by researchers based within the Faculties of Science, Engineering, Humanities & Social Sciences, and from the Strathclyde Business School.

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Policy spillovers in a regional target-setting regime

Learmonth, D. and Swales, J.K. (2005) Policy spillovers in a regional target-setting regime. Environment and Planning A. ISSN 0308-518X

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Abstract

The present UK government has introduced a decentralised, target-driven framework for the delivery of regional policy in England. This paper analyses the operation of such a regime when there are spatial spillovers about which the government is uninformed. It stresses the simple idea that spillovers in such a setting normally lead to a sub-optimal allocation of policy expenditures. A key result is that the existence of negative spillovers on some policies generates expenditure switching towards those policies. The extent of the expenditure switching is related to a number of factors: the size of the spillovers; the initial policy weights in the government's welfare function; the number of agencies; the extent of their knowledge of spillovers; and their degree of collusion. Such expenditure switching is generally not welfare maximising.