Elections accelerate inefficiencies in local public good provision with decentralized leadership

Nobuo Akai and Takahiro Watanabe
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Nobuo Akai: Osaka School of International Public Policy, Osaka University
Takahiro Watanabe: Graduate School of Economics, Osaka University

No 21E004, OSIPP Discussion Paper from Osaka School of International Public Policy, Osaka University

Abstract: This paper introduces the election process to the traditional decentralized leadership model, where the central government does not have a pre-commitment ability, and interregional transfer is optimally designed ex post. In the traditional decentralized leadership model, it has been shown that local public good provision is distorted by ex post transfer. The purpose of this paper is to examine how the introduction of the election process affects inefficiencies in the decentralized leadership situation. Our results show that the direction of this distortion depends on the commitment environment, and the degree of this distortion depends on the degree of spillover.

Keywords: Election.; Decentralized; leadership.; Interregional; transfer (search for similar items in EconPapers)
JEL-codes: H71 H72 H77 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2021-02
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Persistent link: https://EconPapers.repec.org/RePEc:osp:wpaper:21e004

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