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Federalism as a Commitment to Reserving Market Incentives

Yingyi Qian and Barry Weingast ()

Journal of Economic Perspectives, 1997, vol. 11, issue 4, 83-92

Abstract: The authors advance a new perspective in the study of federalism. Their approach views federalism as a governance solution of the state to credibly preserving market incentives. Market incentives are preserved if the state is credibly prevented from compromising on future economic success and from bailing out future failures. The salient features of federalism--decentralization of information and authority and interjurisdictional competition--help provide credible commitment or these purposes. In addition, the authors suggest that some federalism are self-sustaining.

JEL-codes: H11 H77 (search for similar items in EconPapers)
Date: 1997
Note: DOI: 10.1257/jep.11.4.83
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