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Asymmetric yardstick competition and municipal cooperation

Author

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  • Giuranno, Michele
  • Di Liddo, Giuseppe

Abstract

This paper addresses the issue of inter-jurisdictional cooperation when incumbents are pure rent seekers. Asymmetric fiscal needs bias yardstick competition as in Allers (2012). While incumbents gain control over the political yardstick competition by cooperating, this bias leads to asymmetric rent share. Cooperation is also intrinsically unstable. Furthermore, incentives, such as matching grants or economies of scale, may enhance cooperation, but will not increase political accountability.

Suggested Citation

  • Giuranno, Michele & Di Liddo, Giuseppe, 2015. "Asymmetric yardstick competition and municipal cooperation," POLIS Working Papers 180, Institute of Public Policy and Public Choice - POLIS.
    • Handle: RePEc:uca:ucapdv:180
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    References listed on IDEAS

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    1. Roger D. Congleton & Arye L. Hillman (ed.), 2015. "Companion to the Political Economy of Rent Seeking," Books, Edward Elgar Publishing, number 15325.
    2. Kotsogiannis, Christos & Schwager, Robert, 2008. "Accountability and fiscal equalization," Journal of Public Economics, Elsevier, vol. 92(12), pages 2336-2349, December.
    3. Allers, Maarten A., 2012. "Yardstick competition, fiscal disparities, and equalization," Economics Letters, Elsevier, vol. 117(1), pages 4-6.
    4. repec:elg:eechap:15325_3 is not listed on IDEAS
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    Cited by:

    1. Giuseppe Liddo & Michele G. Giuranno, 2020. "The political economy of municipal consortia and municipal mergers," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 37(1), pages 105-135, April.
    2. Giuseppe Di Liddo & Annalisa Vinella, 2022. "Asymmetric yardstick competition: traditional procurement versus public-private partnerships," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 8(3), pages 669-695, November.
    3. Christian Bergholz & Ivo Bischoff, 2018. "Local council members’ view on intermunicipal cooperation: does office-related self-interest matter?," Regional Studies, Taylor & Francis Journals, vol. 52(12), pages 1624-1635, December.
    4. Ivo Bischoff & Eva Wolfschütz, 2021. "Inter-municipal cooperation in administrative tasks – the role of population dynamics and elections," Local Government Studies, Taylor & Francis Journals, vol. 47(4), pages 568-592, July.
    5. Di Liddo, Giuseppe, 2017. "Are local agreements on equalization grants possible? A bargaining model with quasi-linear local preferences on local public goods," Economics Letters, Elsevier, vol. 153(C), pages 9-11.
    6. Di Liddo, Giuseppe & Morone, Andrea, 2017. "Yardstick competition and fiscal disparities: An experimental study," Economics Letters, Elsevier, vol. 159(C), pages 134-137.
    7. Michele G. Giuranno & Manuela Mosca, 2018. "Political realism and models of the state: Antonio de Viti de Marco and the origins of public choice," Public Choice, Springer, vol. 175(3), pages 325-345, June.
    8. Ivo Bischoff & Julia Hauschildt, 2019. "Vocational schools as an instrument of interregional competition—Empirical evidence from German counties [Berufsschulen als Instrument im interregionalen Wettbewerb – Ergebnisse einer Analyse für d," Review of Regional Research: Jahrbuch für Regionalwissenschaft, Springer;Gesellschaft für Regionalforschung (GfR), vol. 39(1), pages 65-89, February.
    9. Giuranno Michele G. & Scrimitore Marcella & Stamatopoulos Giorgos, 2020. "Managerial Accountability Under Yardstick Competition," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 20(2), pages 1-4, June.
    10. Farah, Alfa, 2019. "Fiscal disparity, institutions and asymmetric yardstick competition," Economics Letters, Elsevier, vol. 181(C), pages 74-76.
    11. Ivo Bischoff & Simon Melch & Eva Wolfschuetz, 2019. "Does tax competition drive cooperation in local economic development policies? Evidence on inter-local business parks in Germany," MAGKS Papers on Economics 201906, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    12. Ivo Bischoff & Julia Hauschildt, 2017. "Vocational Schools as an Instrument of Interregional Competition – Empirical Evidence from German Counties," MAGKS Papers on Economics 201722, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    13. Banaszewska, Monika & Bischoff, Ivo & Bode, Eva & Chodakowska, Aneta, 2022. "Does inter-municipal cooperation help improve local economic performance? – Evidence from Poland," Regional Science and Urban Economics, Elsevier, vol. 92(C).
    14. Farah, Alfa, 2018. "Fiscal disparity, institutions and asymmetric yardstick competition," CIW Discussion Papers 2/2018, University of Münster, Center for Interdisciplinary Economics (CIW).
    15. Michael Getzner, 2022. "Socio-economic and spatial determinants of municipal cultural spending," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 46(4), pages 699-722, December.

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    More about this item

    Keywords

    Decentralization; expenditure needs disparities; municipal cooperation.;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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