Constitutional Design and Regional Favoritism
AbstractUsing 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 InfoArticle provided by Association for Public Economic Theory in its journal Journal of Public Economic Theory.
Volume (Year): 4 (2002)
Issue (Month): 1 ()
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Web page: http://www.blackwellpublishing.com/journal.asp?ref=1097-3923
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- Florence Lachet-Touya, 2012. "Les interactions fiscales verticales à la lumière de la théorie des multiprincipaux," Recherches économiques de Louvain, De Boeck Université, vol. 78(1), pages 27-46.
- Robert Witt & Neil Rickman, 2005.
"Favouritism and financial incentives: A natural experiment,"
School of Economics Discussion Papers
0105, School of Economics, University of Surrey.
- Neil Rickman & Robert Witt, 2008. "Favouritism and Financial Incentives: A Natural Experiment," Economica, London School of Economics and Political Science, vol. 75(298), pages 296-309, 05.
- Rickman, Neil & Witt, Robert, 2005. "Favouritism and Financial Incentives: A Natural Experiment," CEPR Discussion Papers 4968, C.E.P.R. Discussion Papers.
- 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.
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