Voting, Lobbying, and the Decentralization Theorem

Ben Lockwood

The Warwick Economics Research Paper Series (TWERPS) from University of Warwick, Department of Economics

Abstract: This paper revisits the fiscal "decentralization theorem", by relaxing the role of the assumption that governments are benevolent, while retaining the assumption of policy uniformity. If instead, decisions are made by direct majority voting, (i) centralization can welfare-dominate decentralization even if there are no externalities and regions are heterogenous ; (ii) decentralization can welfare-dominate centralization even if there are positive externalities and regions are homogenous. The intuition is that the insensitivity of majority voting to preference intensity interacts with the different inefficiencies in the two fiscal regimes to give second-best results. Similar results obtain when governments are benevolent, but subject to lobbying, because now decisions are too sensitive to the preferences of the organised group.

Keywords: Decentralization; majority voting; lobbying; local public goods. (search for similar items in EconPapers)
JEL-codes: H41 H70 H72 (search for similar items in EconPapers)
Pages: 15 pages
Date: 2007
New Economics Papers: this item is included in nep-cdm, nep-pbe, nep-pol and nep-ure
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Citations: View citations in EconPapers (3)

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https://warwick.ac.uk/fac/soc/economics/research/w ... s/2008/twerp_798.pdf

Related works:
Journal Article: VOTING, LOBBYING, AND THE DECENTRALIZATION THEOREM (2008)
Working Paper: Voting, Lobbying, and the Decentralization Theorem (2007)
Working Paper: Voting, Lobbying and the Decentralization Theorem (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:wrk:warwec:798

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