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State government purchases in a federalist economy

Author

Listed:
  • Steven Craig
  • Joel Sailors

Abstract

This paper empirically examines the impact of state government purchasing preference laws on expenditures and revenue of individual states. Purchasing preferences allow firms located within a state to win state contracts without being the low bidder. We find that states with purchasing preference laws spend 3% more in real terms per capita than other states. Evidence is found indicating that the preferences require revenue increases to fund them (the tax base does not rise sufficiently), and that there is some apparent taxpayer resistance to these preferences. This evidence is consistent with a coalition model of state government behavior because it indicates there is significant redistribution of income between groups within the state. Copyright Martinus Nijhoff Publishers 1988

Suggested Citation

  • Steven Craig & Joel Sailors, 1988. "State government purchases in a federalist economy," Public Choice, Springer, vol. 56(2), pages 121-130, February.
    • Handle: RePEc:kap:pubcho:v:56:y:1988:i:2:p:121-130
    DOI: 10.1007/BF00115752
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    References listed on IDEAS

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    1. Gordon Tullock, 1969. "Federalism: Problems of scale," Public Choice, Springer, vol. 6(1), pages 19-29, March.
    2. Maloney, Michael T & McCormick, Robert E & Tollison, Robert D, 1984. "Economic Regulation, Competitive Governments, and Specialized Resources," Journal of Law and Economics, University of Chicago Press, vol. 27(2), pages 329-338, October.
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    6. Rose-Ackerman, Susan, 1981. "Does Federalism Matter? Political Choice in a Federal Republic," Journal of Political Economy, University of Chicago Press, vol. 89(1), pages 152-165, February.
    7. Olson, Mancur, Jr, 1969. "The Principle of "Fiscal Equivalence": The Division of Responsibilities among Different Levels of Government," American Economic Review, American Economic Association, vol. 59(2), pages 479-487, May.
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    11. Shepard, Lawrence, 1978. "Licensing Restrictions and the Cost of Dental Care," Journal of Law and Economics, University of Chicago Press, vol. 21(1), pages 187-201, April.
    12. Craig, Steven G & Inman, Robert P, 1982. "Federal Aid and Public Education: An Empirical Look at the New Fiscal Federalism," The Review of Economics and Statistics, MIT Press, vol. 64(4), pages 541-552, November.
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