Pooling Sovereignty and Subsidiarity Principle
This paper focuses on the choice of centralization of public policy in an economy with two government levels. It argues that centralization by subsidiarity principle stresses a conflicting interest between different jurisdictions instead of working it out. The extent of the conflict of interest is affected by spillovers and differences in public spending tastes. Spending decisions are made by negotiation in the centralized legislature of local representatives, unless they fail to reach an agreement. In the latter case, policy is provided non-cooperatively by local governments. Results show that pooling sovereignty by subsidiarity principle fails to fully internalize spillovers and may produce misallocation of public resources.
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- Michele Giuseppe Giuranno, 2005. "Income Inequality and the Size of the Public Sector," Economics Discussion Papers 603, University of Essex, Department of Economics.
- Ariel Rubinstein, 2010.
"Perfect Equilibrium in a Bargaining Model,"
Levine's Working Paper Archive
252, David K. Levine.
- Giuranno, Michele, 2008.
"Regional income disparity and the size of the Public Sector,"
POLIS Working Papers
114, Institute of Public Policy and Public Choice - POLIS.
- Michele Giuseppe Giuranno, 2009. "Regional Income Disparity and the Size of the Public Sector," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 11(5), pages 697-719, October.
- Klaus Weyerstrass & Johannes Jaenicke & Reinhard Neck & Gottfried Haber & Bas van Aarle & Koen Schoors & Niko Gobbin & Peter Claeys, 2006. "Economic spillover and policy coordination in the Euro area," European Economy - Economic Papers 246, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
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