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The Tragedy of the Commons or the Curse of Federalism

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Author Info

  • Laurent Bouton

    (ECARES, Université Libre de Bruxelles)

  • Marjorie Gassner

    (ECARES, Université Libre de Bruxelles)

  • Vincenzo Verardi

    (ECARES, Université Libre de Bruxelles)

Abstract

It has been suggested that …scal federalism is a good way to induce decentralized entities to behave parsimoniously, but this has been largely criticized in the literature, in particular because of the Common-Pool problem. In this paper, we present an extra facet of the latter problem. We present a simple theoretical model con…rmed by empirical evidence suggesting that vertical imbalance induces govenments to substitute redistributive spending for non-distributive expenditures. This drives …scal policies to be less efficient in reducing income inequality.

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Bibliographic Info

Paper provided by EconWPA in its series Public Economics with number 0511013.

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Length: 29 pages
Date of creation: 17 Nov 2005
Date of revision:
Handle: RePEc:wpa:wuwppe:0511013

Note: Type of Document - pdf; pages: 29
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Web page: http://128.118.178.162

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Keywords: Federalism; Income Inequality; Common Pool; Redistribution;

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References

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Cited by:
  1. Division of Policy and Practice,UNICEF, 2010. "Advancing the Rights of Children, Women and Poor Families through Better Public Finance Policies," Working papers 1001, UNICEF,Division of Policy and Strategy.

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