Constitutional Political Economy

, Volume 14, Issue 3, pp 167–190 | Cite as

A Theory of Menu Federalism: Decentralization by Political Agreement

  • Roger D. Congleton
  • Andreas Kyriacou
  • Jordi Bacaria

Abstract

This paper analyzes agreements between governments that determine the division of policy-making power between central and regional governments. Our analysis demonstrates that initial circumstances and political risks affect the degree of centralization that will be adopted, and that asymmetric forms of federalism are often consequences of ongoing negotiations between regional and central governments over the assignment of policy-making authority. We analyze three settings where gains from “constitutional exchange” may exist: (i) the under-centralized state, (ii) the over-centralized state, and (iii) the constitutional convention. In each case, an asymmetric form of federalism is the predicted outcome, although the degree of asymmetry differs according to starting point. Modern and historical examples are used to illustrate the relevance of our analysis.

menu federalism asymmetric federalism endogenous decentralization constitutional economics political economy public choice trading power federalism constitutional exchange constitutional evolution 

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Copyright information

© Kluwer Academic Publishers 2003

Authors and Affiliations

  • Roger D. Congleton
    • 1
  • Andreas Kyriacou
    • 2
  • Jordi Bacaria
    • 2
  1. 1.George Mason UniversityUSA
  2. 2.Universitat Autonoma de BarcelonaSpain

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