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The taming of Leviathan: Competition among governments

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  • Stefan Sinn

Abstract

This paper assesses the consequences of a high degree of international capital mobility for the behavior of governments. It is argued that countries can be seen as clubs where the government as club management acts as an entrepreneur attempting to attract internationally mobile resources. Within this stylized model it is shown that competition induces the government of a small democratic country to implement policy reforms that increase the welfare of domestic residents if it wants to be reelected. This result suggests that international openness may be a substitute for more overt attempts to contain a government's Leviathan tendencies such as constitutional amendments. Finally, the case against competition among governments is analyzed from the perspective of the club model developed in the paper. Copyright George Mason University 1992

Suggested Citation

  • Stefan Sinn, 1992. "The taming of Leviathan: Competition among governments," Constitutional Political Economy, Springer, vol. 3(2), pages 177-196, March.
    • Handle: RePEc:kap:copoec:v:3:y:1992:i:2:p:177-196
    DOI: 10.1007/BF02393119
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    References listed on IDEAS

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    1. Sinn, Hans-Werner, 1990. "Tax harmonization and tax competition in Europe," European Economic Review, Elsevier, vol. 34(2-3), pages 489-504, May.
    2. Roland VAUBEL, 1985. "International Collusion or Competition for Macroeconomic Policy Coordination? A Restatement," Discussion Papers (REL - Recherches Economiques de Louvain) 1985031, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
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    4. Brennan,Geoffrey & Buchanan,James M., 2006. "The Power to Tax," Cambridge Books, Cambridge University Press, number 9780521027922.
    5. Albert Breton & Galeotti Gianluigi & Pierre Salmon & Ronald Wintrobe, 1991. "The Competitive State," Post-Print hal-00445590, HAL.
    6. Demsetz, Harold, 1969. "Information and Efficiency: Another Viewpoint," Journal of Law and Economics, University of Chicago Press, vol. 12(1), pages 1-22, April.
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