The Political Economy of (De)centralization with Complementary Public Goods

Cheikbossian, Guillaume (2016) The Political Economy of (De)centralization with Complementary Public Goods. Social Choice and Welfare, 47 (2). pp. 315-348.

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Official URL: http://tse-fr.eu/pub/30427

Abstract

This paper provides a political economy analysis of (de)centralization when local public goods -- with spillovers effects -- can be substitutes or complements. Depending on the degree of complementarity between local public goods, median voters strategically delegate policy to either `conservative' or to `liberal' representatives under decentralized decision-making. In the first case, it accentuates the free-rider problem in public good provision, while it mitigates it in the second case. Under centralized decision-making, the process of strategic delegation results in either too low or too much public spending, with the outcome crucially depending on the sharing of the costs of local public spending relative to the size of the spillover effects. Hence, with a common financing rule, centralization is welfare improving if and only if both public good externalities and the degree of complementarity between local public goods are both relatively large.

Item Type: Article
Language: English
Date: August 2016
Refereed: Yes
Uncontrolled Keywords: (De)centralization, Local Public Goods, Complements, Strategic Delegation, Spillovers
JEL codes: D72 - Economic Models of Political Processes - Rent-Seeking, Elections, Legislatures, and Voting Behavior
H41 - Public Goods
H77 - Intergovernmental Relations; Federalism; Secession
Subjects: B- ECONOMIE ET FINANCE
Divisions: TSE-R (Toulouse)
Site: UT1
Date Deposited: 27 Apr 2016 09:16
Last Modified: 07 Mar 2018 13:23
OAI ID: oai:tse-fr.eu:30427
URI: http://publications.ut-capitole.fr/id/eprint/21592

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