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The Political Economy of Policy Centralization: Direct Versus Representative Democracy

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Author Info
Redoano, Michela
Scharf, Kimberley Ann

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Abstract

This paper analyses policy centralization outcomes in a two-jurisdiction model of public good provision choices with heterogeneous policy preferences and inter-jurisdictional policy spillovers under two alternative political procedures: direct referendum and representative democracy. We show that policy centralization is more likely to occur if the choice to centralize is made by elected policymakers rather than by referendum. In these situations, centralized policies converge to the preferred level of the jurisdiction that least favours centralization, rather than to a compromise between the two jurisdictions’ preferred levels.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 3631.

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Date of creation: Nov 2002
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Handle: RePEc:cpr:ceprdp:3631

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Keywords: centralization harmonization

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Find related papers by JEL classification:
H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Persson, Torsten & Tabellini, Guido, 1992. "The Politics of 1992: Fiscal Policy and European Integration," Review of Economic Studies, Blackwell Publishing, vol. 59(4), pages 689-701, October. [Downloadable!] (restricted)
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  2. Besley, Timothy J. & Coate, Stephen, 2000. "Centralized versus Decentralized Provision of Local Public Goods: a Political Economy Analysis," CEPR Discussion Papers 2495, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  3. Gatsios, Konstantine & Karp, Larry, 1991. "Delegation Games in Customs Unions," Review of Economic Studies, Blackwell Publishing, vol. 58(2), pages 391-97, April. [Downloadable!] (restricted)
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  4. Osborne, Martin J & Slivinski, Al, 1996. "A Model of Political Competition with Citizen-Candidates," The Quarterly Journal of Economics, MIT Press, vol. 111(1), pages 65-96, February. [Downloadable!] (restricted)
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  5. Fershtman, Chaim & Judd, Kenneth L & Kalai, Ehud, 1991. "Observable Contracts: Strategic Delegation and Cooperation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 32(3), pages 551-59, August. [Downloadable!] (restricted)
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  6. Dhillon, Amrita & Perroni, Carlo & Scharf, Kimberley A., 1999. "Implementing tax coordination," Journal of Public Economics, Elsevier, vol. 72(2), pages 243-268, May. [Downloadable!] (restricted)
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  7. Gatsios, Konstantine & Karp, Larry, 1995. "Delegation in a general equilibrium model of customs unions," European Economic Review, Elsevier, vol. 39(2), pages 319-333, February. [Downloadable!] (restricted)
  8. Besley, Timothy & Coate, Stephen, 1997. "An Economic Model of Representative Democracy," The Quarterly Journal of Economics, MIT Press, vol. 112(1), pages 85-114, February.
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  9. Christoph A. Schaltegger & Lars Feld, 2001. "On Government Centralization and Budget Referendums: Evidence from Switzerland," CESifo Working Paper Series CESifo Working Paper No. , CESifo GmbH. [Downloadable!]
  10. Besley, Timothy & Coate, Stephen, 1998. "Sources of Inefficiency in a Representative Democracy: A Dynamic Analysis," American Economic Review, American Economic Association, vol. 88(1), pages 139-56, March. [Downloadable!] (restricted)
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Peter Tuchyòa & Martin Gregor, 2005. "Centralization Trade-off with Non-Uniform Taxes," Working Papers IES 81, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised 2005. [Downloadable!]
  2. Hans-Günter Krüsselberg, 2005. "Milton Friedman und der Wissenschaftliche Beirat für Familienfragen Elternkompetenz und Anteilscheine am Schulbudget – Gedanken über Reformpotenziale," Marburg Working Papers on Economics 200506, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung). [Downloadable!]
  3. Bloch, Francis & Zenginobuz, Unal, 2004. "The Effect of Spillovers on the Provision of Local Public Goods," MPRA Paper 186, University Library of Munich, Germany, revised 05 Oct 2006. [Downloadable!]
    Other versions:
  4. Oliver Lorz & Gerald Willmann, 2004. "On the Endogenous Allocation of Decision Powers in Federal Structures," Kiel Working Papers 1209, Kiel Institute for the World Economy. [Downloadable!]
    Other versions:
  5. Cheikbossian, G., 2004. "Lobbying and Rent-Seeking for Public Goods in a Fiscally Centralized System," Cahiers du LASER (LASER Working Papers) 2004.12, LASER (Laboratoire de Science Economique de Richter), Faculty of Economics, University of Montpellier 1. [Downloadable!]
  6. Lars P. Feld & Christoph A. Schaltegger & Jan Schnellenbach, 2005. "On Government Centralization and Fiscal Referendums: A Theoretical Model and Evidence from Switzerland," CREMA Working Paper Series 2005-18, Center for Research in Economics, Management and the Arts (CREMA). [Downloadable!]
    Other versions:
  7. Stegarescu, Dan, 2004. "Economic Integration and Fiscal Decentralization : Evidence from OECD Countries," ZEW Discussion Papers 04-86, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
  8. 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. [Downloadable!]
  9. Martin Gregor & Peter Tuchyňa, 2007. "Centralization Trade-off with Non-Uniform Taxation," AUCO Czech Economic Review, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, vol. 1(3), pages 223-253, November. [Downloadable!]
  10. Lars P. Feld & Justina A.V. Fischer & Gebhard Kirchgässner, 2006. "The Effect of Direct Democracy on Income Redistribution: Evidence for Switzerland," CESifo Working Paper Series CESifo Working Paper No. , CESifo GmbH. [Downloadable!]
    Other versions:
  11. Edward J. Lopez & R. Todd Jewell, 2005. "Strategic Institutional Choice: Voters, States, and Congressional Term Limits," Public Economics 0512006, EconWPA. [Downloadable!]
    Other versions:
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