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The Impact of Referendums on the Centralisation of Public Goods Provision: A Political Economy Approach

Author

Listed:
  • Jan Schnellenbach
  • Lars P. Feld
  • Christoph A. Schaltegger

Abstract

The paper compares decision-making on the centralisation of public goods provision in the presence of regional externalities under representative and direct democratic institutions. A model with two regions, two public goods and regional spillovers is developed in which uncertainty over the true preferences of candidates makes strategic delegation impossible. Instead, it is shown that the existence of rent extraction by delegates alone suffices to make cooperative centralisation more likely through representative democracy. In the non-cooperative case, the more extensive possibilities for institutional design under representative democracy increase the likelihood of centralisation. Direct democracy may thus be interpreted as a federalism-preserving institution.

Suggested Citation

  • Jan Schnellenbach & Lars P. Feld & Christoph A. Schaltegger, 2006. "The Impact of Referendums on the Centralisation of Public Goods Provision: A Political Economy Approach," CESifo Working Paper Series 1803, CESifo.
  • Handle: RePEc:ces:ceswps:_1803
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Niklas Potrafke, 2013. "Evidence on the political principal-agent problem from voting on public finance for concert halls," Constitutional Political Economy, Springer, vol. 24(3), pages 215-238, September.
    2. Lars P. Feld & Justina A.V. Fischer & Gebhard Kirchgässner, 2010. "The Effect Of Direct Democracy On Income Redistribution: Evidence For Switzerland," Economic Inquiry, Western Economic Association International, vol. 48(4), pages 817-840, October.
    3. Feld, Lars P. & Fischer, Justina A.V. & Kirchgaessner, Gebhard, 2007. "The Effect of Direct Democratic Institutions on Income Redistribution: Evidence for Switzerland," SSE/EFI Working Paper Series in Economics and Finance 689, Stockholm School of Economics.
    4. Thomas Döring & Jan Schnellenbach, 2011. "A tale of two federalisms: Germany, the United States and the ubiquity of centralization," Constitutional Political Economy, Springer, vol. 22(1), pages 83-102, March.
    5. Libman, Alexander, 2010. "Constitutions, regulations, and taxes: Contradictions of different aspects of decentralization," Journal of Comparative Economics, Elsevier, vol. 38(4), pages 395-418, December.
    6. Lorenz Blume & Stefan Voigt, 2011. "Federalism and decentralization—a critical survey of frequently used indicators," Constitutional Political Economy, Springer, vol. 22(3), pages 238-264, September.
    7. Libman, Alexander Mikhailovich, 2009. "Эндогенные Границы И Распределение Власти В Федерациях И Международных Сообществах [ENDOGENOUS BOUNDARIES AND DISTRIBUTION OF POWER In the Federation]," MPRA Paper 16473, University Library of Munich, Germany.
    8. Lisa Grazzini & Alessandro Petretto, 2012. "Voting on devolution in a federal country with a bicameral national system," Economics of Governance, Springer, vol. 13(1), pages 51-72, March.
    9. Libman, Alexander, 2008. "Endogenous (De)Centralization and the Russian Federalism," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 9(1), pages 23-57.

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    More about this item

    Keywords

    centralisation; direct democracy; representative democracy; public good provision;
    All these keywords.

    JEL classification:

    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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