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The Stability of Multi-Level Governments

Author

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  • Enriqueta Aragonès
  • Clara Ponsatí

Abstract

This paper studies the stability of a multi-level government. We analyze an extensive form game played between two politicians leading two levels of government. We characterize the conditions that render such government structures stable. We also show that if leaders care about electoral rents and the preferences of the constituencies at different levels are misaligned, then the decentralized government structure may be unsustainable. This result is puzzling because, from a normative perspective, the optimality of decentralized decisions via a multi-level government structure is relevant precisely when different territorial constituencies exhibit preference heterogeneity.

Suggested Citation

  • Enriqueta Aragonès & Clara Ponsatí, 2019. "The Stability of Multi-Level Governments," Working Papers 1109, Barcelona Graduate School of Economics.
  • Handle: RePEc:bge:wpaper:1109
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    File URL: https://www.barcelonagse.eu/sites/default/files/working_paper_pdfs/1109.pdf
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    References listed on IDEAS

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    1. Michel Le Breton & Shlomo Weber, 2003. "The Art of Making Everybody Happy: How to Prevent a Secession," IMF Staff Papers, Palgrave Macmillan, vol. 50(3), pages 1-4.
    2. Goyal, Sanjeev & Staal, Klaas, 2004. "The political economy of regionalism," European Economic Review, Elsevier, vol. 48(3), pages 563-593, June.
    3. Patrick Bolton & Gérard Roland, 1997. "The Breakup of Nations: A Political Economy Analysis," The Quarterly Journal of Economics, Oxford University Press, vol. 112(4), pages 1057-1090.
    4. repec:cup:apsrev:v:80:y:1986:i:02:p:471-487_18 is not listed on IDEAS
    5. Vincent Anesi & Philippe De Donder, 2013. "Voting under the threat of secession: accommodation versus repression," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 41(2), pages 241-261, July.
    6. Edward N. Muller & Erich Weede, 1990. "Cross-National Variation in Political Violence," Journal of Conflict Resolution, Peace Science Society (International), vol. 34(4), pages 624-651, December.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    multi-level governments; repression;

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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