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Municipalities Secession and uncertainty on public goods provision

Author

Listed:
  • Vladimir Ponczek

    () (São Paulo School of Economics, FGV)

  • Enlinson Mattos

    () (São Paulo School of Economics, FGV)

  • Paulo Arvate

    () (São Paulo Business School, FGV)

Abstract

This paper investigates the causes of municipalities secession in Brazil. We develop a model where the median voter decides on the creation of new municipalities observing the trade-off between loss of scale on public production and increase in federal transfers to his/her municipality. Voters acquire more information from the decision undertaken by neighbor's municipalities within the state. We test the adherence of our model using Brazilian data of municipalities creation occurred in the 90's. Our results show that, on average, for each 10 municipalities seceded within a State in the previous period between 6 and 10 new ones are created in the next period.

Suggested Citation

  • Vladimir Ponczek & Enlinson Mattos & Paulo Arvate, 2015. "Municipalities Secession and uncertainty on public goods provision," Economics Bulletin, AccessEcon, vol. 35(1), pages 198-203.
  • Handle: RePEc:ebl:ecbull:eb-14-00718
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    References listed on IDEAS

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    1. Alberto Alesina & Enrico Spolaore, 1997. "On the Number and Size of Nations," The Quarterly Journal of Economics, Oxford University Press, vol. 112(4), pages 1027-1056.
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    4. Brueckner, Jan K., 2006. "Fiscal federalism and economic growth," Journal of Public Economics, Elsevier, vol. 90(10-11), pages 2107-2120, November.
    5. Gramlich, Edward M & Rubinfeld, Daniel L, 1982. "Micro Estimates of Public Spending Demand Functions and Tests of the Tiebout and Median-Voter Hypotheses," Journal of Political Economy, University of Chicago Press, vol. 90(3), pages 536-560, June.
    6. Dilip Mookherjee & Pranab K. Bardhan, 2000. "Capture and Governance at Local and National Levels," American Economic Review, American Economic Association, vol. 90(2), pages 135-139, May.
    7. Jan K. Brueckner, 2004. "Fiscal Decentralization with Distortionary Taxation: Tiebout vs. Tax Competition," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 11(2), pages 133-153, March.
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    9. Cheikbossian, Guillaume, 2008. "Rent-seeking, spillovers and the benefits of decentralization," Journal of Urban Economics, Elsevier, vol. 63(1), pages 217-228, January.
    10. Anna Brink, 2004. "The break-up of municipalities: Voting behavior in local referenda," Economics of Governance, Springer, vol. 5(2), pages 119-135, July.
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    Citations

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    Cited by:

    1. Paulo Arvate & Vladimir Ponczek, 2008. "Municipality secession, voter’s preference and persistence of power," Working Papers 08_07, Universidade de São Paulo, Faculdade de Economia, Administração e Contabilidade de Ribeirão Preto.

    More about this item

    Keywords

    Municipalities secession; median voter; public good provision.;

    JEL classification:

    • H4 - Public Economics - - Publicly Provided Goods
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue

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