We examine the incentives of regions in a country to unite or to separate. We find that smaller regions have greater incentives to unite, relative to larger regions. We show, however, that on the whole, majority voting on separation and union generates excessive incentives to separate. This leads us to examine the scope of alternative political insititutions and rules in overcoming the potential inefficciency. Our paper also provides a wide range of examples to illustrate the different instituions used in actual practice to resolve such problems.
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Paper provided by Erasmus University Rotterdam, Econometric Institute in its series Econometric Institute Report with number
180.
Find related papers by JEL classification: D7 - Microeconomics - - Analysis of Collective Decision-Making H2 - Public Economics - - Taxation, Subsidies, and Revenue H7 - Public Economics - - State and Local Government; Intergovernmental Relations
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Janos Feidler & Klaas Staal, 2008.
"Centralized and decentralized of provision of public goods,"
Discussion Papers
236, SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
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