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The taming of Leviathan: Competition among governments

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  • Stefan Sinn
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    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

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    File URL: http://hdl.handle.net/10.1007/BF02393119
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    Bibliographic Info

    Article provided by Springer in its journal Constitutional Political Economy.

    Volume (Year): 3 (1992)
    Issue (Month): 2 (March)
    Pages: 177-196

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    Handle: RePEc:kap:copoec:v:3:y:1992:i:2:p:177-196

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    Web page: http://www.springerlink.com/link.asp?id=102866

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    References

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    1. Hans-Werner Sinn, 1991. "Tax Harmonization and Tax Competition in Europe," NBER Working Papers 3248, National Bureau of Economic Research, Inc.
    2. Demsetz, Harold, 1969. "Information and Efficiency: Another Viewpoint," Journal of Law and Economics, University of Chicago Press, vol. 12(1), pages 1-22, April.
    3. 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).
    4. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64, pages 416.
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    Cited by:
    1. Daniel Strecker, 1999. "Forschungs- und Technologiepolitik im Standortwettbewerb," Volkswirtschaftliche Diskussionsbeiträge 29, Universität Potsdam, Wirtschafts- und Sozialwissenschaftliche Fakultät.
    2. Schweickert, Rainer & Wiebelt, Manfred, 1996. "Finanzpolitik im Aufholprozeß : Lehren aus Europa, Lateinamerika und Asien," Open Access Publications from Kiel Institute for the World Economy 1689, Kiel Institute for the World Economy (IfW).
    3. Klaus Heine, 2003. "Kompetitiver Föderalismus auch für das öffentliche Gut "Recht"?," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 72(3), pages 472-484.
    4. Wagener, Andreas, 2001. "Double Bertrand tax competition: a fiscal game with governments acting as middlemen," Regional Science and Urban Economics, Elsevier, vol. 31(2-3), pages 273-297, April.
    5. Haucap, Justus, 2010. "Steuerharmonisierung oder Steuerwettbewerb in Europa?," DICE Ordnungspolitische Perspektiven 09, Heinrich‐Heine‐Universität Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    6. SALMON, Pierre, 2005. "Horizontal competition among governments," LEG - Document de travail - Economie 2005-02, LEG, Laboratoire d'Economie et de Gestion, CNRS, Université de Bourgogne.
    7. Justus Haucap, 2012. "Steuern, Wettbewerb und Wettbewerbsneutralität," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 13(1-2), pages 103-115, 02.
    8. Oates, Wallace E., 2001. "Fiscal competition and European Union: contrasting perspectives," Regional Science and Urban Economics, Elsevier, vol. 31(2-3), pages 133-145, April.
    9. Apolte, Thomas, 2001. " How Tame Will Leviathan Become in Institutional Competition? Competition among Governments in the Provision of Public Goods," Public Choice, Springer, vol. 107(3-4), pages 359-81, June.
    10. Lorz, Jens Oliver, 1996. "Capital mobility, tax competition, and lobbying for redistributive capital taxation," Kiel Working Papers 779, Kiel Institute for the World Economy.
    11. Pierre Salmon, 2013. "Horizontal competition in multilevel governmental settings," Working Papers hal-00830876, HAL.
    12. Wohlgemuth, Michael, 2007. "Learning through institutional competition," Freiburg Discussion Papers on Constitutional Economics 07/9, Walter Eucken Institut e.V..
    13. Anthony Evans, 2014. "A subjectivist’s solution to the limits of public choice," The Review of Austrian Economics, Springer, vol. 27(1), pages 23-44, March.
    14. Schweickert, Rainer, 1994. "Regional integration: A worthwhile strategy for catching up?," Kiel Working Papers 623, Kiel Institute for the World Economy.
    15. Scharpf, Fritz W., 2005. "Recht und Politik in der Reform des deutschen Föderalismus," MPIfG Working Paper 05/6, Max Planck Institute for the Study of Societies.

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