Voting, Lobbying and the Decentralization Theorem

Ben Lockwood

No ECO2007/06, Economics Working Papers from European University Institute

Abstract: This paper revisits the fiscal "decentralization theorem", by relaxing the role of the assumption that governments are benevolent, while retaining the assumption of policy uniformity. If instead, decisions are made by direct majority voting, (i) centralization can welfare-dominate decentralization even if there are no externalities and regions are heterogenous; (ii) decentralization can welfare-dominate centralization even if there are positive externalities and regions are homogenous. The intuition is that the insensitivity of majority voting to preference intensity interacts with the different inefficiencies in the two fiscal regimes to give second-best results. Similar results obtain when governments are benevolent, but subject to lobbying, because now decisions are too sensitive to the preferences of the organised group.

Keywords: Decentralization; majority voting; lobbying; local public goods (search for similar items in EconPapers)
JEL-codes: H41 H70 H72 (search for similar items in EconPapers)
Date: 2007
New Economics Papers: this item is included in nep-cdm and nep-pol
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://cadmus.iue.it/dspace/bitstream/1814/6855/1/ECO-2007-06.pdf main text
Our link check indicates that this URL is bad, the error code is: 404 Not Found

Related works:
Journal Article: VOTING, LOBBYING, AND THE DECENTRALIZATION THEOREM (2008)
Working Paper: Voting, Lobbying, and the Decentralization Theorem (2007)
Working Paper: Voting, Lobbying, and the Decentralization Theorem (2007)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eui:euiwps:eco2007/06

Access Statistics for this paper

More papers in Economics Working Papers from European University Institute Badia Fiesolana, Via dei Roccettini, 9, 50014 San Domenico di Fiesole (FI) Italy. Contact information at EDIRC.
Bibliographic data for series maintained by Cécile Brière ().