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Voting in federal elections for local public goods in a fiscally centralized economy

Ikuho Kochi () and Raul Ponce Rodriguez ()

Estudios Económicos, 2011, vol. 26, issue 1, 123-149

Abstract: In this paper we develop a probabilistic voting model of inter-gov\-ern\-men\-tal transfers to explain the distribution and size of local public goods. We find that: i) The parties’ political competition for votes induces the central government to provide regional transfers that lead to Pareto efficient local public goods with and without inter-regional spillovers. ii) The central government has political incentives to produce differentiated and uniform local public goods. Moreover, we provide a comparative analysis to study the influence of political competition, the extent of inter-regional spillovers of local public goods, and the distribution of the population in the economy on the size and distribution of local public spending.

Keywords: inter-governmental transfers; size of government; electoral competition (search for similar items in EconPapers)
JEL-codes: H77 H41 H50 (search for similar items in EconPapers)
Date: 2011
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Handle: RePEc:emx:esteco:v:26:y:2011:i:1:p:123-149