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Voting in federal elections for local public goods in a fiscally centralized economy

Author

Listed:
  • Ikuho Kochi

    (Universidad Autónoma de Ciudad Juárez)

  • Raúl A. Ponce Rodríguez

    (Universidad Autónoma de Ciudad Juárez)

Abstract

In this paper we develop a probabilistic voting model of inter-gov\-ern\-men\-tal transfers to explain the distribution and size of local public goods. We find that: i) The parties’ political competition for votes induces the central government to provide regional transfers that lead to Pareto efficient local public goods with and without inter-regional spillovers. ii) The central government has political incentives to produce differentiated and uniform local public goods. Moreover, we provide a comparative analysis to study the influence of political competition, the extent of inter-regional spillovers of local public goods, and the distribution of the population in the economy on the size and distribution of local public spending.

Suggested Citation

  • Ikuho Kochi & Raúl A. Ponce Rodríguez, 2011. "Voting in federal elections for local public goods in a fiscally centralized economy," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 26(1), pages 123-149.
  • Handle: RePEc:emx:esteco:v:26:y:2011:i:1:p:123-149
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    File URL: http://estudioseconomicos.colmex.mx/archivo/EstudiosEconomicos2011/123-149.pdf
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    References listed on IDEAS

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    1. Besley, Timothy & Coate, Stephen, 2003. "Centralized versus decentralized provision of local public goods: a political economy approach," Journal of Public Economics, Elsevier, vol. 87(12), pages 2611-2637, December.
    2. Michael Smart, 1998. "Taxation and Deadweight Loss in a System of Intergovernmental Transfers," Canadian Journal of Economics, Canadian Economics Association, vol. 31(1), pages 189-206, February.
    3. Ben Lockwood, 2002. "Distributive Politics and the Costs of Centralization," Review of Economic Studies, Oxford University Press, vol. 69(2), pages 313-337.
    4. Pauly, Mark V., 1973. "Income redistribution as a local public good," Journal of Public Economics, Elsevier, vol. 2(1), pages 35-58, February.
    5. Hettich,Walter & Winer,Stanley L., 2005. "Democratic Choice and Taxation," Cambridge Books, Cambridge University Press, number 9780521021807, May.
    6. Meltzer, Allan H & Richard, Scott F, 1981. "A Rational Theory of the Size of Government," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 914-927, October.
    7. Anthony Downs, 1957. "An Economic Theory of Political Action in a Democracy," Journal of Political Economy, University of Chicago Press, vol. 65, pages 135-135.
    8. Mueller,Dennis C., 2003. "Public Choice III," Cambridge Books, Cambridge University Press, number 9780521894753, May.
    9. Khemani, Stuti, 2003. "Partisan politics and intergovernmental transfers in India," Policy Research Working Paper Series 3016, The World Bank.
    10. Sam Bucovetsky & Michael Smart, 2006. "The Efficiency Consequences of Local Revenue Equalization: Tax Competition and Tax Distortions," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 8(1), pages 119-144, January.
    11. Robin W. Boadway & Frank R. Flatters, 1982. "Efficiency and Equalization Payments in a Federal System of Government: A Synthesis and Extension of Recent Results," Canadian Journal of Economics, Canadian Economics Association, vol. 15(4), pages 613-633, November.
    12. John E. Roemer, 1997. "Political-economic equilibrium when parties represent constituents: The unidimensional case," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 14(4), pages 479-502.
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    More about this item

    Keywords

    inter-governmental transfers; size of government; electoral competition;

    JEL classification:

    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General

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