State government purchases in a federalist economy

Steven Craig and Joel Sailors

Public Choice, 1988, vol. 56, issue 2, 130 pages

Abstract: This paper empirically examines the impact of state government purchasing preference laws on expenditures and revenue of individual states. Purchasing preferences allow firms located within a state to win state contracts without being the low bidder. We find that states with purchasing preference laws spend 3% more in real terms per capita than other states. Evidence is found indicating that the preferences require revenue increases to fund them (the tax base does not rise sufficiently), and that there is some apparent taxpayer resistance to these preferences. This evidence is consistent with a coalition model of state government behavior because it indicates there is significant redistribution of income between groups within the state. Copyright Martinus Nijhoff Publishers 1988

Date: 1988
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DOI: 10.1007/BF00115752

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