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The Political Economy of Regionalism

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  • Sanjeev Goyal

    ()
    (Econometric Institute, Erasmus University Rotterdam)

  • Klaas Staal

    ()
    (Econometric Institute, Erasmus University Rotterdam)

Abstract

We examine the incentives of regions in a country to unite or toseparate. We find that smaller regions have greater incentives tounite, relative to larger regions. We show, however, that on thewhole, majority voting on separation and union generates excessiveincentives to separate. This leads us to examine the scope ofalternative political institutions and rules in overcoming thepotential inefficiency. Our paper also provides a wide range ofexamples to illustrate the different institutions used in actualpractice to resolve such problems.

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Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 00-014/1.

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Date of creation: 02 Mar 2000
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Handle: RePEc:dgr:uvatin:20000014

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  2. Rubinfeld, Daniel L., 1987. "The economics of the local public sector," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 2, chapter 11, pages 571-645 Elsevier.
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  8. Wildasin, D.E., 1987. "Nash equilibria in models of fiscal competition," CORE Discussion Papers 1987020, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  9. Enrico Spolaore & Alberto Alesina & Romain Wacziarg, 2000. "Economic Integration and Political Disintegration," American Economic Review, American Economic Association, vol. 90(5), pages 1276-1296, December.
  10. Alesina, Alberto & Spolaore, Enrico, 1997. "On the Number and Size of Nations," The Quarterly Journal of Economics, MIT Press, vol. 112(4), pages 1027-56, November.
  11. Epple, Dennis & Romer, Thomas, 1991. "Mobility and Redistribution," Journal of Political Economy, University of Chicago Press, vol. 99(4), pages 828-58, August.
  12. Salvador Barbera & Matthew O. Jackson, 2002. "Choosing How to Choose: Self Stable Majority Rules," Microeconomics 0211003, EconWPA.
  13. Bolton, Patrick & Roland, Gerard & Spolaore, Enrico, 1996. "Economic theories of the break-up and integration of nations," European Economic Review, Elsevier, vol. 40(3-5), pages 697-705, April.
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  15. 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.
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