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Competition among different levels of government: the re-election problem

Ferruccio Ponzano ()

POLIS Working Papers from Institute of Public Policy and Public Choice - POLIS

Abstract: The aim of this paper is to analyse competition between two levels of government that want to maximise their tax revenues facing the problem of re-election. We assume that citizens have incomplete information about central and local public goods. Then, they are not able to choose a single efficient level of these two goods but they are able to choose a set of combinations. This choice represent the constraint faced by the levels of government. We develop a model starting from this assumption and three extensions to analyse the behaviour of two levels of government in different scenarios. We find that in each situation the equal sharing of the tax revenue is not the best solution for the governments.

JEL-codes: D43 D72 H11 H71 H77 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2005-07
New Economics Papers: this item is included in nep-cdm, nep-mic and nep-pbe
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