Abstract
The stability of federal systems is a thorny issue. Several scholars have attempted to come to grips with this problem and have proposed mechanisms or institutions which may contribute to the stabilization of federal systems. In many instances, however, the underlying mechanisms and micro-foundations are poorly specified. In this paper I build upon existing models dealing with decentralization and secession to incorporate unequal income distributions and externalities of public goods. Based on this some insights may be derived on the appropriate mechanisms to foster federal stability.
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JEL Classification: H77, H41, C72
This paper partly draws on research funded by the Swiss National Science Foundation (Grant No. 5004-0487882/1). An earlier version entitled ‘‘Federalism and the Size of Nations’’ was presented at the conference ‘‘Micro-Foundations of Federal Institutional Stability’’ at Duke University (Durham, April 30–May 1, 2004). Comments by participants at this conference and greatly appreciated. First version: March 2004, this version: November 1, 2004
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Hug, S. Federal Stability in Unequal Societies. Constit Polit Econ 16, 113–124 (2005). https://doi.org/10.1007/s10602-005-2231-9
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DOI: https://doi.org/10.1007/s10602-005-2231-9