Arbeitspapier
Small States, Large Unitary States and Federations
Employing a political-economics approach, this paper compares small states and unions when the former fail to internalize cross-border externalities of publicly provided goods. It discusses two types of unions: federations with more than one level of government and unitary states. While unitary states are unable to differentiate public spending ac-cording to differing preferences, rents of governments in a federation are higher due to a common-pool problem. The comparison leads to the following results. (1) Citizens prefer small states to large states if spillover effects are weak. (2) They benefit from a multi-level government only if their preferences heavily differ from the median-voter's preferences and if spillovers are strong. Based on this comparison the paper also dis-cusses the creation of unions. Making specific assumption on the distribution of prefer-ences, it analyzes strong Nash equilibria and coalition-proof equilibria at the union formation stage.
- Sprache
-
Englisch
- Erschienen in
-
Series: CESifo Working Paper ; No. 729
- Klassifikation
-
Wirtschaft
- Thema
-
voting theory
electoral accountability
federations
strong Nash equilibria
coalition-proof equilibria.
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Wrede, Matthias
- Ereignis
-
Veröffentlichung
- (wer)
-
Center for Economic Studies and ifo Institute (CESifo)
- (wo)
-
Munich
- (wann)
-
2002
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:44 MEZ
Datenpartner
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Objekttyp
- Arbeitspapier
Beteiligte
- Wrede, Matthias
- Center for Economic Studies and ifo Institute (CESifo)
Entstanden
- 2002
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