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A Voting Model of Federal Standards with Externalities

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  • Crémer, Jacques
  • Palfrey, Thomas R.

Abstract

This paper proposes a framework for studying policy making in a federal system in the presence of spillover externalities. Local jurisdictions choose local policies by majority rule subject to standards that are set by majority rule at the federal level. We characterize the induced preferences of voters for federal policies, prove existence of local majority rule equilibrium, provide an example of nonexistence of global majority rule equilibrium, and explore the welfare properties of federal standards in the presence of spillovers.
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Suggested Citation

  • Crémer, Jacques & Palfrey, Thomas R., 2003. "A Voting Model of Federal Standards with Externalities," IDEI Working Papers 182, Institut d'Économie Industrielle (IDEI), Toulouse.
    • Handle: RePEc:ide:wpaper:624
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    Cited by:

    1. Francis Bloch & Unal Zenginobuz, 2007. "The effect of spillovers on the provision of local public goods," Review of Economic Design, Springer;Society for Economic Design, vol. 11(3), pages 199-216, November.
    2. Cremer, Jacques & Palfrey, Thomas R., 2006. "An equilibrium voting model of federal standards with externalities," Journal of Public Economics, Elsevier, vol. 90(10-11), pages 2091-2106, November.
    3. Maria Gallego, David Scoones, 2005. "The Art of Compromise," Working Papers eg0042, Wilfrid Laurier University, Department of Economics, revised 2005.

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