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Constitutional Design and Regional Favoritism

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  • Zantman, Wilfried

Abstract

Using a principal-agent framework, this paper analyzes a public good provision problem in which a central government tries to favor one of the regions for political reasons. We show how this favoritism leads to some distortions of the allocation scheme compared to the benevolent case. We then study the effects of decentralization, modeled here by giving an outside option to the minority region. We exhibit a trade-off between rent and equality and study the allocative and redistributive effects of a decentralized setting. Copyright 2002 by Blackwell Publishing Inc.

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Bibliographic Info

Article provided by Association for Public Economic Theory in its journal Journal of Public Economic Theory.

Volume (Year): 4 (2002)
Issue (Month): 1 ()
Pages: 71-93

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Handle: RePEc:bla:jpbect:v:4:y:2002:i:1:p:71-93

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Cited by:
  1. Donna Harris & Benedikt Herrmann, 2012. "When to Favour Your Own group? The Threats of Costly Punishments and In-group Favouritism," Economics Series Working Papers 628, University of Oxford, Department of Economics.
  2. Florence Lachet-Touya, 2012. "Les interactions fiscales verticales à la lumière de la théorie des multiprincipaux," Recherches économiques de Louvain, De Boeck Université, De Boeck Université, vol. 78(1), pages 27-46.
  3. Robert Witt & Neil Rickman, 2005. "Favouritism and financial incentives: A natural experiment," School of Economics Discussion Papers, School of Economics, University of Surrey 0105, School of Economics, University of Surrey.

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