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Asymmetric yardstick competition and municipal cooperation

Author

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  • Di Liddo, Giuseppe
  • Giuranno, Michele G.

Abstract

This paper addresses the issue of inter-jurisdictional cooperation when incumbents are pure rent seekers. Asymmetric fiscal needs bias yardstick competition as in Allers (2012). While incumbents gain control over the political yardstick competition by cooperating, this bias leads to asymmetric rent share. Cooperation is also intrinsically unstable. Furthermore, incentives, such as matching grants or economies of scale, may enhance cooperation, but will not increase political accountability.

Suggested Citation

  • Di Liddo, Giuseppe & Giuranno, Michele G., 2016. "Asymmetric yardstick competition and municipal cooperation," Economics Letters, Elsevier, vol. 141(C), pages 64-66.
  • Handle: RePEc:eee:ecolet:v:141:y:2016:i:c:p:64-66
    DOI: 10.1016/j.econlet.2016.01.015
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    References listed on IDEAS

    as
    1. Allers, Maarten A., 2012. "Yardstick competition, fiscal disparities, and equalization," Economics Letters, Elsevier, vol. 117(1), pages 4-6.
    2. Kotsogiannis, Christos & Schwager, Robert, 2008. "Accountability and fiscal equalization," Journal of Public Economics, Elsevier, vol. 92(12), pages 2336-2349, December.
    3. repec:elg:eechap:15325_3 is not listed on IDEAS
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    Cited by:

    1. repec:eee:ecolet:v:159:y:2017:i:c:p:134-137 is not listed on IDEAS
    2. Di Liddo, Giuseppe, 2017. "Are local agreements on equalization grants possible? A bargaining model with quasi-linear local preferences on local public goods," Economics Letters, Elsevier, vol. 153(C), pages 9-11.
    3. Di Liddo, Giuseppe & Morone, Andrea, 2017. "Yardstick competition and fiscal disparities: An experimental study," Economics Letters, Elsevier, vol. 159(C), pages 134-137.
    4. Ivo Bischoff & Julia Hauschildt, 2017. "Vocational Schools as an Instrument of Interregional Competition – Empirical Evidence from German Counties," MAGKS Papers on Economics 201722, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    5. Christian Bergholz & Ivo Bischoff, 2016. "Local council members’ view on inter-municipal cooperation: Does office-related self interest matter?," MAGKS Papers on Economics 201647, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).

    More about this item

    Keywords

    Decentralisation; Expenditure needs disparities; Municipal cooperation;

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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