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The closer the better? Institutional distance and information blurring in a political agency model

David Bartolini (), Agnese Sacchi (), Domenico Scalera () and Alberto Zazzaro ()

No 146, Mo.Fi.R. Working Papers from Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences

Abstract: Government accountability increases with voters' proximity to policy-makers. Decentralization reforms implemented in many countries in the last twenty years are based on this principle. We present a political agency model that challenges this view and shows that the effects of increasing proximity may depend on the institutional context. In particular, the presence of rent-seeking politicians and heterogeneity in voters' political awareness produce three distinct optimal levels of decentralization. Furthermore, optimal distance depends on the capacity of rent-seeking incumbents to blur information available to voters. When the incumbent reacts to increasing proximity with more blurring activity, the optimal distance increases. Accordingly, less decentralization is preferable.

Keywords: government accountability; information; institutional distance; rent-seeking; political awareness (search for similar items in EconPapers)
JEL-codes: D72 D82 D83 H40 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cdm, nep-mic and nep-pol
Date: 2018-01
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Persistent link: https://EconPapers.repec.org/RePEc:anc:wmofir:146

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