Subject category:
Ethics and Social Responsibility
Published by:
Harvard Kennedy School
Length: 4 pages
Topics:
Economics; Inter-governmental relations
Share a link:
https://casecent.re/p/7421
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Abstract
When budget problems at the state level prompt the commonwealth of Massachusetts to reduce the amount of tax revenue it transfers to local city and town governments, some of the cities and towns announce that they will consider initiating their own local lotteries to compete with the state''s high-profile lottery and supplement their own revenue streams. The case poses the problem faced by Governor William Weld, who must determine his position on city and town lotteries. The case raises some classical problems of fiscal federalism, among them the economies of scale in administration and risk-spreading versus the advantages of local initiative. In addition, the redistributional consequences of lotteries and the links between informational failures and lottery participation are illuminated.
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Abstract
When budget problems at the state level prompt the commonwealth of Massachusetts to reduce the amount of tax revenue it transfers to local city and town governments, some of the cities and towns announce that they will consider initiating their own local lotteries to compete with the state''s high-profile lottery and supplement their own revenue streams. The case poses the problem faced by Governor William Weld, who must determine his position on city and town lotteries. The case raises some classical problems of fiscal federalism, among them the economies of scale in administration and risk-spreading versus the advantages of local initiative. In addition, the redistributional consequences of lotteries and the links between informational failures and lottery participation are illuminated.