Samaritan’s Dilemmas, Wealth Redistribution, and Polycentricity

Abstract

It is nearly universally presumed that redistribution can be carried out effectively only at the national or even global level, because local redistribution will be negated through personal mobility: recipients will move to high-paying jurisdictions while taxpayers will move away from those jurisdictions. To avoid this situation requires redistribution to be concentrated at national and not at local levels. In contrast to this standard line of argument, we explain how it is that redistribution is more effectively pursued at local than at national levels. To explain this reversal from standard analytical implications, we integrate three concepts that are not present in the standard analysis. These concepts are the Samaritan’s dilemma, co-production, and polycentricity. It is interaction among these three concepts that reverses the implications of the standard analysis of redistribution.