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Constitutional Design and Regional Favoritism


  • Zantman, Wilfried


Using a principal-agent framework, this paper analyzes a public good provision problem in which a central government tries to favor one of the regions for political reasons. We show how this favoritism leads to some distortions of the allocation scheme compared to the benevolent case. We then study the effects of decentralization, modeled here by giving an outside option to the minority region. We exhibit a trade-off between rent and equality and study the allocative and redistributive effects of a decentralized setting. Copyright 2002 by Blackwell Publishing Inc.

Suggested Citation

  • Zantman, Wilfried, 2002. " Constitutional Design and Regional Favoritism," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 4(1), pages 71-93.
  • Handle: RePEc:bla:jpbect:v:4:y:2002:i:1:p:71-93

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    References listed on IDEAS

    1. Christian Schultz, 1996. "Polarization and Inefficient Policies," Review of Economic Studies, Oxford University Press, vol. 63(2), pages 331-344.
    2. Gibbons, Robert, 1988. "Learning in Equilibrium Models of Arbitration," American Economic Review, American Economic Association, vol. 78(5), pages 896-912, December.
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    4. Myerson, Roger B., 1998. "Extended Poisson Games and the Condorcet Jury Theorem," Games and Economic Behavior, Elsevier, vol. 25(1), pages 111-131, October.
    5. Timothy Feddersen & Wolfgang Pesendorfer, 1997. "Voting Behavior and Information Aggregation in Elections with Private Information," Econometrica, Econometric Society, vol. 65(5), pages 1029-1058, September.
    6. Cukierman, Alex & Tommasi, Mariano, 1998. "When Does It Take a Nixon to Go to China?," American Economic Review, American Economic Association, vol. 88(1), pages 180-197, March.
    7. repec:cup:apsrev:v:82:y:1988:i:04:p:1231-1244_19 is not listed on IDEAS
    8. Banks, Jeffrey S., 1990. "A model of electoral competition with incomplete information," Journal of Economic Theory, Elsevier, vol. 50(2), pages 309-325, April.
    9. Harrington, Joseph E, Jr, 1993. "Economic Policy, Economic Performance, and Elections," American Economic Review, American Economic Association, vol. 83(1), pages 27-42, March.
    10. repec:cup:apsrev:v:88:y:1994:i:02:p:327-335_09 is not listed on IDEAS
    11. Rodrik, Dani, 1993. "The Positive Economics of Policy Reform," American Economic Review, American Economic Association, vol. 83(2), pages 356-361, May.
    12. Roemer, J.E., 1992. "The Emergence of Party Ideology when Voter Are Uncertain about How the Economy Works," Papers 396, California Davis - Institute of Governmental Affairs.
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    Cited by:

    1. Donna Harris & Benedikt Herrmann & Andreas Kontoleon, 2009. "Two's Company, Three's a Group: The impact of group identity and group size on in-group favouritism," Environmental Economy and Policy Research Working Papers 41.2009, University of Cambridge, Department of Land Economics, revised 2009.
    2. Neil Rickman & Robert Witt, 2008. "Favouritism and Financial Incentives: A Natural Experiment," Economica, London School of Economics and Political Science, vol. 75(298), pages 296-309, May.
    3. Donna Harris & Benedikt Herrmann, 2012. "When to Favour Your Own group? The Threats of Costly Punishments and In-group Favouritism," Economics Series Working Papers 628, University of Oxford, Department of Economics.
    4. Florence Lachet-Touya, 2012. "Les interactions fiscales verticales à la lumière de la théorie des multiprincipaux," Recherches économiques de Louvain, De Boeck Université, vol. 78(1), pages 27-46.
    5. Rubinchik-Pessach, Anna, 2005. "Can decentralization be beneficial?," Journal of Public Economics, Elsevier, vol. 89(7), pages 1231-1249, July.

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