Cheikbossian, Guillaume (2016) The Political Economy of (De)centralization with Complementary Public Goods. TSE Working Paper, n. 16-644, Toulouse

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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: Monograph (Working Paper)
Language: English
Date: May 2016
Place of Publication: Toulouse
Uncontrolled Keywords: (De)centralization, Local Public Goods, Complements, Strategic Delegation, Spillovers
JEL Classification: 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)
Institution: Université Toulouse 1 Capitole
Site: UT1
Date Deposited: 13 May 2016 12:57
Last Modified: 02 Apr 2021 15:53
OAI Identifier: oai:tse-fr.eu:30433
URI: https://publications.ut-capitole.fr/id/eprint/21653

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