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Federalism, distributive politics and representative democracy

Author

Listed:
  • Guillaume Cheikbossian

Abstract

We analyze federal systems of government in which local public policies are financed by general taxation. In a decentralized political system there is, in each region, a vote to elect a local representative while in a centralized political system a single representative is elected by a federal vote. It is shown that under decentralization, voters strategically elect liberal representatives so as to nullify any element of cooperation between representatives in the decision-making stage. Thus, there is a trade-off between the budgetary externality and a “policy closer to the people”, but the democratic choice is biased towards decentralization. Copyright Springer-Verlag Berlin Heidelberg 2000

Suggested Citation

  • Guillaume Cheikbossian, 2000. "Federalism, distributive politics and representative democracy," Economics of Governance, Springer, vol. 1(2), pages 105-122, July.
  • Handle: RePEc:spr:ecogov:v:1:y:2000:i:2:p:105-122
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    References listed on IDEAS

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    1. Sinn, Hans-Werner, 1990. "Tax harmonization and tax competition in Europe," European Economic Review, Elsevier, vol. 34(2-3), pages 489-504, May.
    2. Alberto Alesina & Reza Baqir & William Easterly, 1999. "Public Goods and Ethnic Divisions," The Quarterly Journal of Economics, Oxford University Press, vol. 114(4), pages 1243-1284.
    3. Wilson, John D., 1986. "A theory of interregional tax competition," Journal of Urban Economics, Elsevier, vol. 19(3), pages 296-315, May.
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    Citations

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    Cited by:

    1. Guillaume Cheikbossian & Nicolas Marceau, 2007. "Why Is Law Enforcement Decentralized?," Cahiers de recherche 0719, CIRPEE.
    2. Toke S. Aidt & Jayasri Dutta, 2017. "Fiscal Federalism and Electoral Accountability," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 19(1), pages 38-58, February.
    3. Peter Tuchyòa & Martin Gregor, 2005. "Centralization Trade-off with Non-Uniform Taxes," Working Papers IES 81, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised 2005.
    4. Robert A.J. Dur & Hein J. Roelfsema, 2002. "Why does Centralisation fail to internalise Policy Externalities?," Tinbergen Institute Discussion Papers 02-056/3, Tinbergen Institute, revised 11 Nov 2003.
    5. Julio, Paulo & Peralta, Susana, 2008. "Endogenous spillovers in the trade-off between centralization and decentralization," FEUNL Working Paper Series wp538, Universidade Nova de Lisboa, Faculdade de Economia.
    6. Grégoire Rota Graziosi, 2009. "On the Strategic Use of Representative Democracy in International Agreements," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 11(2), pages 281-296, April.
    7. Guillaume Cheikbossian, 2016. "The political economy of (De)centralization with complementary public goods," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 47(2), pages 315-348, August.
    8. Guillaume Cheikbossian & Nicolas Marceau, 2007. "Why Is Law Enforcement Decentralized?," Cahiers de recherche 0719, CIRPEE.
    9. repec:got:cegedp:25 is not listed on IDEAS
    10. Lorz, Oliver & Willmann, Gerald, 2005. "On the endogenous allocation of decision powers in federal structures," Journal of Urban Economics, Elsevier, vol. 57(2), pages 242-257, March.
    11. Robert Dur & Hein Roelfsema, 2005. "Why does centralisation fail to internalise policy externalities?," Public Choice, Springer, vol. 122(3), pages 395-416, March.
    12. Oliver Lorz & Gerald Willmann, 2013. "Size versus scope: on the trade-off facing economic unions," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 20(2), pages 247-267, April.
    13. Loeper, Antoine, 2017. "Cross-border externalities and cooperation among representative democracies," European Economic Review, Elsevier, vol. 91(C), pages 180-208.
    14. Fredriksson, Per G. & Matschke, Xenia & Minier, Jenny, 2010. "Environmental policy in majoritarian systems," Journal of Environmental Economics and Management, Elsevier, pages 177-191.
    15. Oliver Lorz & Gerald Willmann, 2008. "Enlargement versus Deepening: The Trade-off Facing Economic Unions," Working Papers VIVES Research Centre for Regional Economics 2, KU Leuven, Faculty of Economics and Business, VIVES Research Centre for Regional Economics.
    16. Lorz, Jens Oliver & Willmann, Gerald, 2004. "On the Endogenous Allocation of Decision Powers in Federal Structures," Kiel Working Papers 1209, Kiel Institute for the World Economy (IfW).

    More about this item

    Keywords

    JEL Classification:H30; H72; H73; Key words:Federalism; Distributive Politics; Strategic Voting; Decentralization; Local Public Goods;

    JEL classification:

    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects

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