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Pooling Sovereignty and Subsidiarity Principle

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  • Michele Giuranno

Abstract

This paper focuses on the choice of centralization of public policy in an economy with two government levels. It argues that centralization by subsidiarity principle stresses a conflicting interest between different jurisdictions instead of working it out. The extent of the conflict of interest is affected by spillovers and differences in public spending tastes. Spending decisions are made by negotiation in the centralized legislature of local representatives, unless they fail to reach an agreement. In the latter case, policy is provided non-cooperatively by local governments. Results show that pooling sovereignty by subsidiarity principle fails to fully internalize spillovers and may produce misallocation of public resources.

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Bibliographic Info

Paper provided by Department of Economics, University of York in its series Discussion Papers with number 09/01.

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Date of creation: Jan 2009
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Handle: RePEc:yor:yorken:09/01

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Keywords: Public goods; Centralization; Bargaining;

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  1. Michele Giuseppe Giuranno, 2005. "Income Inequality and the Size of the Public Sector," Economics Discussion Papers 603, University of Essex, Department of Economics.
  2. Ariel Rubinstein, 2010. "Perfect Equilibrium in a Bargaining Model," Levine's Working Paper Archive 661465000000000387, David K. Levine.
  3. Klaus Weyerstrass & Johannes Jaenicke & Reinhard Neck & Gottfried Haber & Bas van Aarle & Koen Schoors & Niko Gobbin & Peter Claeys, 2006. "Economic spillover and policy coordination in the Euro area," European Economy - Economic Papers 246, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
  4. Giuranno, Michele, 2008. "Regional income disparity and the size of the Public Sector," POLIS Working Papers 114, Institute of Public Policy and Public Choice - POLIS.
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