Bicameral bargaining and federation formation
AbstractThis paper takes a political economy approach to fiscal centralisation through federation formation. We analyse a two-region model of federalism with inter-regional policy spillovers. Departing from a state of independence with decentralised provision of public policy, we analyse the proposed formation of a federation to internalise the spillovers. We consider equilibrium allocations under alternative institutional environments involving: simple majority voting, a restriction of uniform taxation, and regional bargaining through a bicameral legislature. Bicameralism facilitates federation formation for the largest set of parameter values of the model, which is consistent with the observation that bicameralism and federalism often appear together. Copyright Springer Science+Business Media, LLC 2013
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Bibliographic InfoArticle provided by Springer in its journal Public Choice.
Volume (Year): 154 (2013)
Issue (Month): 3 (March)
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Web page: http://www.springerlink.com/link.asp?id=100332
Political economy; Fiscal federalism; Public goods; Spillovers; Bicameralism;
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- Bruno DE BORGER & Stefan PROOST, 2013.
"The political economy of pricing and capacity decisions for congestible local public goods in a federal state,"
Center for Economic Studies - Discussion papers
ces13.16, Katholieke Universiteit Leuven, Centrum voor Economische Studiën.
- DE BORGER, Bruno & PROOST, Stef, 2013. "The political economy of pricing and capacity decisions for congestible local public goods in a federal state," Working Papers 2013020, University of Antwerp, Faculty of Applied Economics.
- Petra Ens, 2009. "Tax competition and equalization: the impact of voluntary cooperation on the efficiency goal," Working Papers 2009/16, Institut d'Economia de Barcelona (IEB).
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