During the last two decades, decentralization has been supposed as a tool for making the public sector policies more efficient. Despite the claimed benefits, there are some costs; Some of decentralization theorists believe that devolution of pure public goods provision to local governments has led to the failure of decentralization policies.
This article uses game theory to study the implications of decentralization policies for public goods from the efficiency point of view. The study findings which are based on a mathematical language and the game theory, reveal the fact that devolution of pure public goods provision to local governments violates Pareto efficiency measure.
JEL Classification: H23, H24, H72