Abstract.
We analyze federal systems of government in which local public policies are financed by general taxation. In a decentralized political system there is, in each region, a vote to elect a local representative while in a centralized political system a single representative is elected by a federal vote. It is shown that under decentralization, voters strategically elect liberal representatives so as to nullify any element of cooperation between representatives in the decision-making stage. Thus, there is a trade-off between the budgetary externality and a “policy closer to the people”, but the democratic choice is biased towards decentralization.
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Received: September 5, 1998 / Accepted: June 7, 1999
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Cheikbossian, G. Federalism, distributive politics and representative democracy. Econ Gov 1, 105–122 (2000). https://doi.org/10.1007/PL00021677
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DOI: https://doi.org/10.1007/PL00021677