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Political Bargaining in a Federation: Buchanan meets Coase

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Author Info
Gradstein, Mark

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Abstract

In recent decades, the issues of federalism and political integration have gained prominence in public debate as well as in the academic realm. A frequently made point is that allowing free secession may protect the minority’s interests, thus providing it with an incentive to enter the federation. This Paper explicitly considers the political process in the federation arguing that the option to secede may distort the political choices made by the individual regions to improve their bargaining positions. As a result, the allocation of resources in the federation could well end up being inefficient and unattractive for the minority region. In contrast, limiting the secession possibilities by requiring the consent of a majority of voters through a regional referendum, rather than leaving it to the discretion of the legislature, restores efficiency.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 4188.

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Date of creation: Jan 2004
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Handle: RePEc:cpr:ceprdp:4188

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Related research
Keywords: federation secession

Find related papers by JEL classification:
D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior
H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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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. Bolton, Patrick & Roland, Gérard, 1995. "The Break up of Nations: A Political Economy Analysis," CEPR Discussion Papers 1225, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  2. Rogoff, Kenneth, 1985. "The Optimal Degree of Commitment to an Intermediate Monetary Target," The Quarterly Journal of Economics, MIT Press, vol. 100(4), pages 1169-89, November. [Downloadable!] (restricted)
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  4. Besley, Timothy & Coate, Stephen, 2003. "Centralized versus decentralized provision of local public goods: a political economy approach," Journal of Public Economics, Elsevier, vol. 87(12), pages 2611-2637, December. [Downloadable!] (restricted)
  5. Casella, Alessandra, 1992. "Participation in a Currency Union," American Economic Review, American Economic Association, vol. 82(4), pages 847-63, September. [Downloadable!] (restricted)
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  6. Dixit, Avinash & Olson, Mancur, 2000. "Does voluntary participation undermine the Coase Theorem?," Journal of Public Economics, Elsevier, vol. 76(3), pages 309-335, June. [Downloadable!] (restricted)
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  7. Warneryd, Karl, 1998. "Distributional conflict and jurisdictional organization," Journal of Public Economics, Elsevier, vol. 69(3), pages 435-450, September. [Downloadable!] (restricted)
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  8. Buchanan, James M & Faith, Roger L, 1987. "Secession and the Limits of Taxation: Toward a Theory of Internal Exit," American Economic Review, American Economic Association, vol. 77(5), pages 1023-31, December. [Downloadable!] (restricted)
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  11. Wittman, Donald, 1989. "Why Democracies Produce Efficient Results," Journal of Political Economy, University of Chicago Press, vol. 97(6), pages 1395-1424, December. [Downloadable!] (restricted)
Full references

Cited by:
(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. 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!]
  2. Mika Widgrèn & Pekka Sulamaa, 2004. "Aasian regionalismi vs. globaali vapaakauppa : Simulointitutkimus taloudellisista vaikutuksista," Discussion Papers 940, The Research Institute of the Finnish Economy. [Downloadable!]
  3. Sami Napari, 2005. "Occupational Segregation during the the 1980s and 1990s - The Case of Finnish Manufacturing," Discussion Papers 976, The Research Institute of the Finnish Economy. [Downloadable!]
  4. Antti Kauhanen, 2004. "Yrittäjien ansiot, työajat ja työkuormitus: Selvitys ekonomien ja insinöörien yrittäjyydestä," Discussion Papers 960, The Research Institute of the Finnish Economy. [Downloadable!]
  5. Mathias Calonius, 2004. "Luovan yhteiskunnan rakenteet, luovat toimialat, muotoiluala," Discussion Papers 945, The Research Institute of the Finnish Economy. [Downloadable!]
  6. Essi Eerola & Niku Määttänen & Panu Poutvaara, 2004. "Citizens Should Vote on Secession," Discussion Papers 939, The Research Institute of the Finnish Economy. [Downloadable!]
    Other versions:
  7. Tuomas Möttönen, 2004. "Turvallisuus ja kilpailukyky kansainvälisten kilpailukykymittareiden valossa," Discussion Papers 952, The Research Institute of the Finnish Economy. [Downloadable!]
  8. Mika Widgrén, 2004. "Suomen, Aasian ja uusien EU-maiden suhteellinen etu ja kilpailuasetelmien muutos," Discussion Papers 941, The Research Institute of the Finnish Economy. [Downloadable!]
  9. Sergey Boltramovich & Pavel Filippov & Hannu Hernesniemi, 2004. "The Innovation System and Business Environment of Northwest Russia," Discussion Papers 953, The Research Institute of the Finnish Economy. [Downloadable!]
  10. Tuomas Möttönen, 2004. "Sotilaallinen t&k -panostus ja kilpailukyky," Discussion Papers 954, The Research Institute of the Finnish Economy. [Downloadable!]
  11. Raine Hermans & Anne Arvola & Leena Hauhio & Maarit Lindström & Hanna Nikinmaa & Panu Tikka & Olli Haltia, 2004. "Bioteknologisten sovellusten arvonluonti Suomen metsäklusterissa," Discussion Papers 955, The Research Institute of the Finnish Economy. [Downloadable!]
  12. Olavi Rantala, 2004. "Toimialojen t&k-panostusten ja tuottavuuden ennustejärjestelmä - Julkisen t&k-rahoituksen vaikuttavuus ja tuottavuuden pitkän ajan kasvu," Discussion Papers 948, The Research Institute of the Finnish Economy. [Downloadable!]
  13. Grégoire Rota Graziosi, 2007. "Secession and the Limits of Taxation: Toward a Theory of Internal Exit: Comment," American Economic Review, American Economic Association, vol. 97(1), pages 534-538, March.
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