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Electoral Control under Decentralization: Decentralization as unbundling of public goods provision

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  • Farfan-Vallespin, Antonio
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    Abstract

    This paper addresses the question of whether a decentralized government is subject to a stronger level of electoral control than a centralized government. When electoral control is strong an incumbent investing a low level of effort in providing public goods will face a serious threat of being voted out of office. This threat should provide the incentives to the incumbent to exert effort in order to be re-elected as shown by Barro (1973) and Ferejohn (1986). According to the literature decentralization should increase electoral control due to the fact that under centralization the incumbent only needs to please the half plus one of the electorate in order to be re-elected. This paper presents analytically two new sources of differences in electoral control: assuming that public goods can be classified in lower tier public goods (e.g. sub-national or local level) and upper tier public goods (e.g. national public goods), then under centralization there are potential advantages derived from bundling the provision of both types of public goods, whereas under decentralization there are potential advantages derived from a clear delimitation of the responsibilities of the provider of each type of public good. We show that the trade-off depends on the probability distribution of the shocks and on the size of these shocks. --

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    Bibliographic Info

    Paper provided by Verein für Socialpolitik, Research Committee Development Economics in its series Proceedings of the German Development Economics Conference, Hannover 2010 with number 37.

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    Date of creation: 2010
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    Handle: RePEc:zbw:gdec10:37

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    Keywords: Decentralization; electoral control; provision of public goods; bundling of issues;

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    1. HINDRIKS, Jean & LOCKWOOD, Ben, 2005. "Decentralization and electoral accountability: incentives, separation, and voter welfare," CORE Discussion Papers 2005046, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    2. Banks, Jeffrey S. & Sundaram, Rangarajan K., 1998. "Optimal Retention in Agency Problems," Journal of Economic Theory, Elsevier, vol. 82(2), pages 293-323, October.
    3. Rogoff, Kenneth & Sibert, Anne, 1988. "Elections and Macroeconomic Policy Cycles," Review of Economic Studies, Wiley Blackwell, vol. 55(1), pages 1-16, January.
    4. Kessing, Sebastian G., 2010. "Federalism and accountability with distorted election choices," Journal of Urban Economics, Elsevier, vol. 67(2), pages 239-247, March.
    5. Panizza, Ugo, 1999. "On the determinants of fiscal centralization: Theory and evidence," Journal of Public Economics, Elsevier, vol. 74(1), pages 97-139, October.
    6. Seabright, Paul, 1996. "Accountability and decentralisation in government: An incomplete contracts model," European Economic Review, Elsevier, vol. 40(1), pages 61-89, January.
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