Local public goods in a democracy: Theory and evidence from rural India

Santanu Gupta and Raghbendra Jha ()

ASARC Working Papers from Australian National University, Australia South Asia Research Centre

Abstract: This paper examines allocation of local public goods over jurisdictions (villages) with individuals with identical tastes and different incomes, in a model with democratic institutions and majority rule. The median voter (in income) in each jurisdiction determines the probability of re-election for the incumbent government. The jurisdiction with the median of these median voters is most favoured. With identical median voters in jurisdictions, and with re-election requiring less than 50mandate, jurisdictions with higher income inequality get favoured. Results from a survey data (from NCAER) on infrastructure provision in 1669 Indian villages confirm this hypothesis. Ethnic fragmentation does not affect public good provision but political fragmentation does. Finally, villages with the median population are the most favoured for public goods allocation. Sparsely populated and too densely populated villages are relatively neglected.

Keywords: median voter; local public good; reservation utility (search for similar items in EconPapers)
JEL-codes: H41 H72 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cdm, nep-cwa, nep-pbe, nep-pol, nep-soc and nep-ure
Date: Written 2006
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http://rspas.anu.edu.au/papers/asarc/WP2006_06.pdf (application/pdf)

Related works:
Working Paper: Local public goods in a democracy: Theory and evidence from rural India (2006)
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