EconPapers    
Economics at your fingertips  
 

OPTIMAL DISTRIBUTION OF POWERS IN A FEDERATION: A SIMPLE, UNIFIED FRAMEWORK

Sanjit Dhami and Ali Al‐Nowaihi
Authors registered in the RePEc Author Service: Ali al-Nowaihi ()

Bulletin of Economic Research, 2007, vol. 59, issue 3, 197-229

Abstract: In a federation with n≥ 2 regions the relative optimality of five regimes – autarky, centralization, unregulated devolution, regulated devolution and direct democracy – is examined. Public policy consists of redistribution and regional public good provision. Regional incomes are uncertain and correlated. Estimates of the usefulness of regional public goods are uncertain and the federal government's estimates are noisier relative to those of regional governments. The optimality of each regime is influenced by four margins – regional insurance, coarseness of federal information, internalization of spillovers and raiding the commons. Regulated devolution is the only regime that is capable of producing the constrained first best level of public goods. Federal insurance under direct democracy can be inadequate relative to that under a utilitarian federal government. An increase in the number of regions allows better risk pooling but also greater opportunities for raiding the commons.

Date: 2007
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://doi.org/10.1111/j.0307-3378.2007.00257.x

Related works:
Working Paper: Optimal Distribution Of Powers In A Federation: A Simple, Unified Framework (2005) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:buecrs:v:59:y:2007:i:3:p:197-229

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0307-3378

Access Statistics for this article

More articles in Bulletin of Economic Research from Wiley Blackwell
Bibliographic data for series maintained by Wiley Content Delivery ().

 
Page updated 2025-03-19
Handle: RePEc:bla:buecrs:v:59:y:2007:i:3:p:197-229