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Government and Cities: Contests and the Decentralization of Decision Making


  • Ira N. Gang

    () (Rutgers University)

  • Gil S. Epstein

    () (Bar Ilan University)


Governments do not have perfect information regarding the priorities and the needs of different groups in the economy. This lack of knowledge opens the door for different groups to lobby the government in order to receive the government’s support. We set up a model of hierarchical contests and compare the implications of a centralized allocation process with a decentralized allocation process. We show the potential existence of a poverty trap as a result of fiscal federalism.

Suggested Citation

  • Ira N. Gang & Gil S. Epstein, 2002. "Government and Cities: Contests and the Decentralization of Decision Making," Departmental Working Papers 200215, Rutgers University, Department of Economics.
  • Handle: RePEc:rut:rutres:200215

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    References listed on IDEAS

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    Cited by:

    1. Gil Epstein & Ira Gang, 2007. "Understanding the development of fundamentalism," Public Choice, Springer, vol. 132(3), pages 257-271, September.
    2. Gil S. Epstein & Ira N. Gang, 2006. "Contests, NGOs, and Decentralizing Aid," Review of Development Economics, Wiley Blackwell, vol. 10(2), pages 285-296, May.

    More about this item


    Economic-Models-of-the-Political-Process; fiscal federalism; Intergovernmental-Relations; rent-seeking;

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration


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