Prior-Consultation as a Strategy for Central-Local Cooperation in Social Security: With a Focus on Cash Benefit Programs

Abstract

Introduced in 2012, the prior-consultation system, serving as a policy channel through which central and local governments deliberate together to achieve balance and inter-complementarity in their social security projects, helps reduce such perennial issues as ‘delivery overload’ and ‘diseconomies of scale,’ haracteristic of small-scale, fragmented projects that are similar and duplicative. This article examines how the prior-consultation system encourages local governments to move away from zero-sum cash benefit contests, transforming potential non-cooperative situations into cooperative ones. The prior-consultation system is discussed here as a useful framework that can transform a Nash equilibrium, arising from asymmetrical conditions under which agents cannot trust each other, into an optimal equilibrium.