On the Endogenous Allocation of Decision Powers in Federal Structures

Arbeitspapier

This paper provides a political-economy explanation of the degree of centralization in economic policy making. To determine which policies are to be centralized, regions select representatives who then negotiate the degree of centralization and the regional cost shares of centrally decided policies. We show that the resulting degree of centralization is suboptimally low. Voters strategically delegate to representatives who are averse to public spending and hence prefer decentralized decisions in order to reduce their region's cost share. When spillovers are asymmetric, strategic delegation is stronger at the periphery than at the center.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: cege Discussion Papers ; No. 25

Classification and Topics

• Classification: Wirtschaft ; Intergovernmental Relations; Federalism; Secession ; Structure, Scope, and Performance of Government ; Public Goods
• Subject: Political Economy ; Fiscal Federalism ; Endogenous Centralization ; Constitutional Design ; Zentralstaat ; Föderalismus ; Finanzföderalismus ; Lokales öffentliches Gut ; Public Choice ; Spillover-Effekt ; Verfassung ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Lorz, Jens Oliver ; Willmann, Gerald
• Event: Veröffentlichung
• (who): University of Göttingen, Center for European, Governance and Economic Development Research (cege)
• (where): Göttingen
• (when): 2004

Further information

• Handle: http://hdl.handle.net/10419/22152
• Last update: 10.03.2025, 11:42 AM CET