While the major goal of intergovernmental equalization transfers is the pursuit of equity, there are also a number of unintended consequences produced by equalization programs. In this dissertation we analyze the negative effect of equalization on the size of factors that are either used to measure the equalized jurisdictions' fiscal capacity in gap-filling equalization programs or are taxed with the purpose of further redistribution among jurisdictions in tax base sharing programs. We propose a theoretical framework in which the comparative statics analysis shows how equalization programs can induce substitution effect in the representative individual's consumption bundle via changes in the perceived price of the good that is associated with the size of the factor used to measure the equalized jurisdictions' fiscal capacity or taxed with the purpose of further redistribution among the jurisdictions. As the representative individual changes consumption of this good, the size of the factor also changes, resulting either in a reduction of the budget revenue collections or in the size of tax bases in the equalized jurisdictions. In the empirical part of this dissertation we examine the existence and economic significance of these effects using two cases of equalization programs. First, we examine the adverse effect of the equalization programs on revenue collections in Russia's regions where regional governments redistributed resources among their constituent municipalities based on the size of their actual revenue collections. Second, we examine the adverse effect of the tax base sharing program in the Twin Cities Metropolitan area of Minnesota on the size of commercial and industrial property where this property is taxed at a uniform rate and then reassigned to the municipalities in the inverse proportion to the size of their per capita real property. In both cases our empirical results support the hypothesis that the equalization programs adversely affect the size of the factors that are used to measure the equalized jurisdictions' fiscal capacity or that are taxed with the purpose of further redistribution among jurisdictions in tax base sharing programs.