Yardstick Competition and Policy Innovation
AbstractA simple model of yardstick competition between jurisdictions is presented. Governments of jurisdictions face the alternative to choose between an old and a new policy with stochastic payoffs. The new policy is superior to the old policy in one state of the world, and inferior in the other. Governments are either benevolent, serving the interest of the voter, or rent-seeking. An equilibrium with yardstick competition is shown to exist where bad governments having a good government in their neighborhood choose the new policy more often compared to an equilibrium without relative performance evaluation. Overall, the probability of policy innovations is increased by yardstick competition. The model has a testable empirical implication saying that policy innovations should show spatial correlation.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by EconWPA in its series Public Economics with number 0511010.
Date of creation: 16 Nov 2005
Date of revision:
Note: Type of Document - pdf
Contact details of provider:
Web page: http://220.127.116.11
Other versions of this item:
- D6 - Microeconomics - - Welfare Economics
- D7 - Microeconomics - - Analysis of Collective Decision-Making
- H - Public Economics
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-11-19 (All new papers)
- NEP-PBE-2005-11-19 (Public Economics)
- NEP-POL-2005-11-19 (Positive Political Economics)
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.:
- Coate, Stephen & Morris, Stephen, 1995. "On the Form of Transfers in Special Interests," Journal of Political Economy, University of Chicago Press, vol. 103(6), pages 1210-35, December.
- Besley, Timothy & Case, Anne, 1995.
"Incumbent Behavior: Vote-Seeking, Tax-Setting, and Yardstick Competition,"
American Economic Review,
American Economic Association, vol. 85(1), pages 25-45, March.
- Timothy Besley & Anne Case, 1992. "Incumbent Behavior: Vote Seeking, Tax Setting and Yardstick Competition," NBER Working Papers 4041, National Bureau of Economic Research, Inc.
- BELLEFLAMME, Paul & HINDRIKS, Jean, 2002.
"Yardstick competition and political agency problems,"
CORE Discussion Papers
2002029, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Paul Belleflamme & Jean Hindriks, 2005. "Yardstick competition and political agency problems," Social Choice and Welfare, Springer, vol. 24(1), pages 155-169, 09.
- Paul Belleflamme & Jean Hindriks, 2001. "Yardstick Competition and Political Agency Problems," Working Papers 441, Queen Mary, University of London, School of Economics and Finance.
- Bordignon, Massimo & Cerniglia, Floriana & Revelli, Federico, 2003. "In search of yardstick competition: a spatial analysis of Italian municipality property tax setting," Journal of Urban Economics, Elsevier, vol. 54(2), pages 199-217, September.
- Christos Kotsogiannis & Robert Schwager, 2001.
"Political Uncertainty and Policy Innovation,"
0111, Exeter University, Department of Economics.
- Besley, Timothy J. & Smart, Michael, 2002. "Does Tax Competition Raise Voter Welfare?," CEPR Discussion Papers 3131, C.E.P.R. Discussion Papers.
- Wohlgemuth, Michael, 2007. "Learning through institutional competition," Freiburg Discussion Papers on Constitutional Economics 07/9, Walter Eucken Institut e.V..
- Johannes Rincke, 2006. "Policy innovation in local jurisdictions: Testing for neighborhood influence in school choice policies," Public Choice, Springer, vol. 129(1), pages 189-200, October.
- Wohlgemuth, Michael, 2011. "The boundaries of the state," Freiburg Discussion Papers on Constitutional Economics 11/3, Walter Eucken Institut e.V..
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (EconWPA).
If references are entirely missing, you can add them using this form.