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Fiscal disparity, institutions and asymmetric yardstick competition

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  • Farah, Alfa

Abstract

This letter introduces a disparity in the costs of rent appropriation in a yardstick competition model and shows that the yardstick bias caused by fiscal disparity might be mitigated. In particular, the incumbent of the fiscally rich jurisdiction can no longer fully exploit his or her fiscal advantage.

Suggested Citation

  • Farah, Alfa, 2019. "Fiscal disparity, institutions and asymmetric yardstick competition," Economics Letters, Elsevier, vol. 181(C), pages 74-76.
    • Handle: RePEc:eee:ecolet:v:181:y:2019:i:c:p:74-76
    DOI: 10.1016/j.econlet.2019.04.029
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    References listed on IDEAS

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    1. Besley, Timothy & Case, Anne, 1995. "Incumbent Behavior: Vote-Seeking, Tax-Setting, and Yardstick Competition," American Economic Review, American Economic Association, vol. 85(1), pages 25-45, March.
    2. Timothy Besley & Torsten Persson, 2011. "Pillars of Prosperity: The Political Economics of Development Clusters," Economics Books, Princeton University Press, edition 1, number 9624.
    3. Di Liddo, Giuseppe & Giuranno, Michele G., 2016. "Asymmetric yardstick competition and municipal cooperation," Economics Letters, Elsevier, vol. 141(C), pages 64-66.
    4. Allers, Maarten A., 2012. "Yardstick competition, fiscal disparities, and equalization," Economics Letters, Elsevier, vol. 117(1), pages 4-6.
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    Cited by:

    1. Bonev, Petyo & Glachant, Matthieu & Söderberg, Magnus, 2022. "Implicit yardstick competition between heating monopolies in urban areas: Theory and evidence from Sweden," Energy Economics, Elsevier, vol. 109(C).

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    More about this item

    Keywords

    Yardstick competition; Fiscal disparity; Institutions; Rent appropriation;
    All these keywords.

    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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