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Government and Cities: Contests and the Decentralization of Decision Making

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  • Epstein, Gil S
  • Gang, Ira

Abstract

Governments do not have perfect information regarding the priorities and the needs of different groups in the economy. This lack of knowledge opens the door for different groups to lobby the government in order to receive the government’s support. We set up a model of hierarchical contests and compare the implications of a centralized allocation process with a decentralized allocation process. We show the potential existence of a poverty trap as a result of fiscal federalism.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 3585.

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Date of creation: Oct 2002
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Handle: RePEc:cpr:ceprdp:3585

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Keywords: contests; economic models of political processes; fiscal federalism; intergovernmental relations; interjurisdictional differentials and their effects;

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References

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Citations

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Cited by:
  1. Epstein, Gil S. & Gang, Ira N., 2005. "Contests, NGOs and Decentralizing Aid," IZA Discussion Papers 1711, Institute for the Study of Labor (IZA).
  2. Gang, Ira N. & Epstein, Gil S., 2004. "Understanding the Development of Fundamentalism," IZA Discussion Papers 1227, Institute for the Study of Labor (IZA).

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