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The Impact of Referendums on the Centralisation of Public Goods Provision: A Political Economy Approach

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Author Info

  • Jan Schnellenbach

    ()
    (University of Heidelberg, Department of Economics)

  • Lars Feld

    ()
    (University of Heidelberg, Department of Economics)

  • Christoph schaltegger

    ()
    (Eidgenössisches Finanzdepartement, Bern, Switzerland)

Abstract

The paper compares decision-making on the centralisation of public goods provision in the presence of regional externalities under representative and direct democratic institutions. A model with two regions, two public goods and regional spillovers is developed in which uncertainty over the true preferences of candidates makes strategic delegation impossible. Instead, it is shown that the existence of rent extraction by delegates alone suffices to make cooperative centralisation more likely through representative democracy. In the non-cooperative case, the more extensive possibilities for institutional design under representative democracy increase the likelihood of centralisation. Direct democracy may thus be interpreted as a federalism-preserving institution.

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File URL: http://www.uni-heidelberg.de/md/awi/forschung/dp440.pdf
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Bibliographic Info

Paper provided by University of Heidelberg, Department of Economics in its series Working Papers with number 0440.

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Length: 36 pages
Date of creation: May 2007
Date of revision: May 2007
Handle: RePEc:awi:wpaper:0440

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Keywords: centralisation; direct democracy; representative democracy; public good provision.;

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References

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Citations

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Cited by:
  1. Feld, Lars P. & Fischer, Justina A.V. & Kirchgaessner, Gebhard, 2007. "The Effect of Direct Democratic Institutions on Income Redistribution: Evidence for Switzerland," Working Paper Series in Economics and Finance 689, Stockholm School of Economics.
  2. Lars P. Feld & Justina A.V. Fischer & Gebhard Kirchgassner, 2006. "The Effect of Direct Democracy on Income Redistribution: Evidence for Switzerland," CREMA Working Paper Series 2006-24, Center for Research in Economics, Management and the Arts (CREMA).
  3. Lisa Grazzini & Alessandro Petretto, 2007. "Voting on Devolution in a Federal Country with a Bicameral National System," Working Papers - Economics wp2007_09, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
  4. Janos Feidler & Klaas Staal, 2012. "Centralized and decentralized provision of public goods," Economics of Governance, Springer, vol. 13(1), pages 73-93, March.
  5. Libman, Alexander, 2008. "Endogenous (De)Centralization and the Russian Federalism," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 9(1), pages 23-57.
  6. Potrafke, Niklas, 2013. "Evidence on the political principal-agent problem from voting on public finance for concert halls," Munich Reprints in Economics 19268, University of Munich, Department of Economics.
  7. Libman, Alexander, 2010. "Constitutions, regulations, and taxes: Contradictions of different aspects of decentralization," Frankfurt School - Working Paper Series 138, Frankfurt School of Finance and Management.
  8. Thomas Döring & Jan Schnellenbach, 2011. "A tale of two federalisms: Germany, the United States and the ubiquity of centralization," Constitutional Political Economy, Springer, vol. 22(1), pages 83-102, March.
  9. Martin Gregor & Lenka Stastna, 2012. "The decentralization tradeoff for complementary spillovers," Review of Economic Design, Springer, vol. 16(1), pages 41-69, March.
  10. Lorenz Blume & Stefan Voigt, 2011. "Federalism and decentralization—a critical survey of frequently used indicators," Constitutional Political Economy, Springer, vol. 22(3), pages 238-264, September.
  11. Martin Gregor, 2012. "Modeling positive inter-jurisdictional public spending spillovers," Working Papers IES 2012/16, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Jun 2012.
  12. Libman, Alexander Mikhailovich, 2009. "Эндогенные Границы И Распределение Власти В Федерациях И Международных Сообществах
    [ENDOGENOUS BOUNDARIES AND DISTRIBUTION O
    ," MPRA Paper 16473, University Library of Munich, Germany.

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