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Pooling Sovereignty and Subsidiarity Principle

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  • Michele Giuranno

Abstract

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.

Suggested Citation

  • Michele Giuranno, 2009. "Pooling Sovereignty and Subsidiarity Principle," Discussion Papers 09/01, Department of Economics, University of York.
  • Handle: RePEc:yor:yorken:09/01
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    File URL: https://www.york.ac.uk/media/economics/documents/discussionpapers/2009/0901.pdf
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    References listed on IDEAS

    as
    1. Rubinstein, Ariel, 1982. "Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, vol. 50(1), pages 97-109, January.
    2. 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.
    3. 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 2008 - 2015 246, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    4. Giuranno, Michele Giuseppe, 2005. "Income Inequality and the Size of the Public Sector," Economics Discussion Papers 8895, University of Essex, Department of Economics.
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    Cited by:

    1. 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.

    More about this item

    Keywords

    Public goods; Centralization; Bargaining;

    JEL classification:

    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • H0 - Public Economics - - General
    • H40 - Public Economics - - Publicly Provided Goods - - - General

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