The political economy of fixed regional investment shares with an illustration for Belgian Railway investments

Stef Proost and Vera Zaporozhets ()

Working Papers of Department of Economics, Leuven from KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven

Abstract: Many local public goods are allocated by federal governments using fixed regional shares: every region is entitled a fixed share of the total budget for a particular type of public good. This paper compares this fixed regional sharing rule with two alternative allocation rules: first best and common pool allocation. We find that the fixed regional sharing rule performs relatively well if the regional shares are reasonable. Legislative bargaining theory is used to study the determination of the fixed regional shares.

Keywords: local public goods; political economy; railways (search for similar items in EconPapers)
JEL-codes: H41 H77 L9 (search for similar items in EconPapers)
Date: 2010-02
New Economics Papers: this item is included in nep-geo, nep-pol and nep-ure
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ete:ceswps:ces10.05

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