Tactical transfers in a federal institutional setting
One of the main scope for studying political economy is to understand how income redistribution is determined. In the paper tactical redistribution, through which candidates aim at maximizing the share of votes obtained in an election, is analyzed in a federal institutional setting, where different level of government coexist. Dixit & Londregan (1996) model is taken as a starting point; their model is extended in order to allow the analysis of the interactions between the different government levels. Four institutional settings are considered, entailing different rules and a different degree of decentralization in the policy and transfer determination process: fully localized and fully centralized governments, federal government with transfers among regions and federal government with transfers among social groups.
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