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The Benefits of Federalism and the Risk of Overcentralization

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  • Eichenberger, Reiner

Abstract

In the economic literature on federalism, centralization is frequently identified with overall homogeneous policies, reactions in the post constitutional political process are often neglected, and comparative analysis is rarely carried out. This contribution presents some elements of a more comparative, process oriented approach. The citizens' incentives to make use of the voice and exit options are analyzed. Federalism strengthens both exit and voice. Centralization is endogenous: governments delegate tasks selfishly to higher levels, hence overcentralization may result. A future European constitution should, therefore, promote federalism in order to prevent endogenous overcentralization. This cannot be achieved without strengthening direct democracy. Copyright 1994 by WWZ and Helbing & Lichtenhahn Verlag AG

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Kyklos.

Volume (Year): 47 (1994)
Issue (Month): 3 ()
Pages: 403-20

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Handle: RePEc:bla:kyklos:v:47:y:1994:i:3:p:403-20

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Cited by:
  1. Frey, Bruno S. & Eichenberger, Reiner, 1996. "FOCJ: Competitive governments for Europe," International Review of Law and Economics, Elsevier, vol. 16(3), pages 315-327, September.
  2. Frey, Bruno S., 2004. "Direct Democracy for a Living Constitution," Freiburg Discussion Papers on Constitutional Economics 04/5, Walter Eucken Institut e.V..
  3. Libman, Alexander & Ushkalova, Daria, 2009. "Post-Soviet countries in global and regional institutional competition: The case of Kazakhstan," MPRA Paper 12595, University Library of Munich, Germany.
  4. Sacchi, Agnese & Salotti, Simone, 2014. "The asymmetric nature of fiscal decentralization: theory and practice," MPRA Paper 54506, University Library of Munich, Germany.
  5. Beat Spirig & Rolf Weder, 2008. "To Wait or Not to Wait: Swiss EU-Membership as an Investment under Uncertainty," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 144(I), pages 85-114, March.
  6. Mark Schelker & Reiner Eichenberger, 2003. "Starke Rechnungsprüfungskommissionen: Wichtiger als direkte Demokratie und Föderalismus? Ein erster Blick auf die Daten," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 139(III), pages 351-373, September.
  7. Feld, Lars P., 1997. "Exit, voice and income taxes: The loyalty of voters," European Journal of Political Economy, Elsevier, vol. 13(3), pages 455-478, September.
  8. Bruno S. Frey & Alois Stutzer, 2004. "The Role of Direct Democracy and Federalism in Local Power," CREMA Working Paper Series 2004-25, Center for Research in Economics, Management and the Arts (CREMA).
  9. Schneider, Friedrich G., 2009. "Is a Federal European Constitution for an enlarged European Union necessary? Some preliminary suggestions using public choice analysis," Center for European, Governance and Economic Development Research Discussion Papers 83, University of Goettingen, Department of Economics.
  10. Piero Conforti & Pasquale De Muro & Luca Salvatici, 2002. "Decentralization and Development in South-Saharan-Africa," QA - Rivista dell'Associazione Rossi-Doria, Associazione Rossi Doria, issue 3, November.
  11. Kersten Kellermann, 2008. "„Kosten der Kleinheit” und die Föderalismusdebatte in der Schweiz," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 9(2), pages 196-225, 05.
  12. Schneider, Friedrich G., 2009. "Is a Federal European Constitution for an enlarged European Union necessary? Some preliminary suggestions using public choice analysis," Center for European, Governance and Economic Development Research Discussion Papers 83, University of Goettingen, Department of Economics.
  13. Daniel Strecker, 1999. "Forschungs- und Technologiepolitik im Standortwettbewerb," Volkswirtschaftliche Diskussionsbeiträge 29, Universität Potsdam, Wirtschafts- und Sozialwissenschaftliche Fakultät.
  14. Mark Schelker, 2012. "The influence of auditor term length and term limits on US state general obligation bond ratings," Public Choice, Springer, vol. 150(1), pages 27-49, January.
  15. Wohlgemuth, Michael & Sideras, Jörn, 2004. "Globalisability of Universalisability? How to apply the Generality Principle and Constitutionalism internationally," Freiburg Discussion Papers on Constitutional Economics 04/7, Walter Eucken Institut e.V..
  16. Thomas Lenk & Friedrich Schneider, 1999. "Back to a Divided Tax System as an 'Ideal Way' for Reinforcing German Federalism in Times of Adequate Financial Aid for East Germany," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 219(3+4), pages 409-437, September.
  17. Margit Schratzenstaller, 2000. "Inter-nation divergence within the EU and options for a progressive revenue system," Intereconomics: Review of European Economic Policy, Springer, vol. 35(5), pages 243-252, September.
  18. Schelker, Mark & Eichenberger, Reiner, 2010. "Auditors and fiscal policy: Empirical evidence on a little big institution," Journal of Comparative Economics, Elsevier, vol. 38(4), pages 357-380, December.
  19. Reiner Eichenberger & Mark Schelker, 2007. "Independent and competing agencies: An effective way to control government," Public Choice, Springer, vol. 130(1), pages 79-98, January.

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