Administrative Federalism and a Central Government with Regionally Based Preferences
Administrative federalism is defined as a constitution where the central state sets quality standards for public projects, and the local jurisdictions decide which projects are to be carried out. Decentralized decisions are inefficient because of an interjurisdictional spillover. A centralized decision is inefficient because the center favors one region and is restricted to distortionary instruments when redistributing between regions. For intermediate values of the spillover, it is shown that administrative federalism leads to a higher welfare than both centralization and decentralization. Moreover, because jurisdictions fear to be exploited, they only join a federation whose constitution is administrative federalism but not one with a fully centralized constitution. Copyright Kluwer Academic Publishers 1999
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Juergen Eichberger & Rüdiger Pethig, 1990.
"Constitutional Choice of Rules,"
08-90, Universität Siegen, Fakultät Wirtschaftswissenschaften, Wirtschaftsinformatik und Wirtschaftsrecht.
- Tirole, J., 1993.
"The Internal Organization of Government,"
93-11, Massachusetts Institute of Technology (MIT), Department of Economics.
- Grossman, Sanford J & Hart, Oliver D, 1986.
"The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration,"
Journal of Political Economy,
University of Chicago Press, vol. 94(4), pages 691-719, August.
- Oliver Hart & Sanford Grossman, 1985. "The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration," Working papers 372, Massachusetts Institute of Technology (MIT), Department of Economics.
- Grossman, Sanford J & Hart, Oliver, 1985. "The Cost and Benefits of Ownership: A Theory of Vertical and Lateral Integration," CEPR Discussion Papers 70, C.E.P.R. Discussion Papers.
- Grossman, Sanford J. & Hart, Oliver D., 1986. "The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration," Scholarly Articles 3450060, Harvard University Department of Economics.
- Persson, Torsten & Tabellini, Guido, 1996. "Federal Fiscal Constitutions: Risk Sharing and Redistribution," Journal of Political Economy, University of Chicago Press, vol. 104(5), pages 979-1009, October.
- Seabright, Paul, 1994.
"Accountability and Decentralization in Government: An Incomplete Contracts Model,"
CEPR Discussion Papers
889, C.E.P.R. Discussion Papers.
- Seabright, Paul, 1996. "Accountability and decentralisation in government: An incomplete contracts model," European Economic Review, Elsevier, vol. 40(1), pages 61-89, January.
- Martimort, David, 1996.
"The multiprincipal nature of government,"
European Economic Review,
Elsevier, vol. 40(3-5), pages 673-685, April.
- Homburg, Stefan, 1997. "Ursachen und Wirkungen eines zwischenstaatlichen Finanzausgleichs," EconStor Open Access Articles, ZBW - German National Library of Economics, pages 61-95.
- Vaubel, Roland, 1994. "The public choice analysis of European integration: A survey," European Journal of Political Economy, Elsevier, vol. 10(1), pages 227-249, May.
When requesting a correction, please mention this item's handle: RePEc:kap:itaxpf:v:6:y:1999:i:2:p:165-189. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Guenther Eichhorn)or (Christopher F. Baum)
If references are entirely missing, you can add them using this form.