Asymmetric yardstick competition and municipal cooperation

Giuseppe Di Liddo and Michele Giuranno

Economics Letters, 2016, vol. 141, issue C, 64-66

Abstract: This paper addresses the issue of inter-jurisdictional cooperation when incumbents are pure rent seekers. Asymmetric fiscal needs bias yardstick competition as in Allers (2012). While incumbents gain control over the political yardstick competition by cooperating, this bias leads to asymmetric rent share. Cooperation is also intrinsically unstable. Furthermore, incentives, such as matching grants or economies of scale, may enhance cooperation, but will not increase political accountability.

Keywords: Decentralisation; Expenditure needs disparities; Municipal cooperation (search for similar items in EconPapers)
JEL-codes: D72 H77 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (17)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:141:y:2016:i:c:p:64-66

DOI: 10.1016/j.econlet.2016.01.015

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