NO. 162. DISTRIBUTED OPTIMIZATION IN PUBLIC ECONOMICS VIA DECENTRALIZED PUBLIC FINANCE: A PROPOSAL FOR THE SPATIAL DISTRIBUTION OF PUBLIC GOODS AND SERVICES

I. Papastaikoudis, P. Prodromidis, J. Watson and I. Lestas 2025.

The paper proposes a new approach in public economics, in a decentralized finance setting, by using distributed optimization techniques to help plan inter-regional and intra-regional public goods and services for multiple regions, each region with its own budget, natural and population characteristics.

The goal is to provide policy makers with a planning optimization tool for public infrastructure spanning over a number of regions in a way that improves the welfare of its constituent populations. To that end it treats the problem as a utility maximization problem and calculates the Marshallian demand for public infrastructure.

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