Tax Competition and Revelation of Preferences for Public Expenditure

Bucovetsky, Sam; Marchand, Maurice; Pestieau, Pierre

doi:10.1006/juec.1997.2075

Cited by 63 publications

(37 citation statements)

References 4 publications

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“…However, in some models of fiscal federalism for instance, tax competition with mobile factors (Bucovetsky et al, 1998) or redistribution with population mobility (Brown and Oates, 1987;Wildasin, 1991) policy heterogeneity is inherently socially suboptimal as in our setup. 4 However, these models are not strategically equivalent to ours because the distributional impact of heterogeneous policies on local jurisdiction is not the same.…”

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confidence: 92%

Coordination in Heterogeneous Federal Systems

Loeper

2011

SSRN Journal

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We compare centralized and decentralized policy making in a federation in which policy heterogeneity is inherently costly and preferences vary across jurisdictions: all jurisdictions agree that some harmonization is desirable but no one agrees on the direction of harmonization. This type of collective choice problem arises when members of a federal system have to coordinate nonbudgetary policies such as laws, regulations, standards, or diplomatic policies. Contrary to the common wisdom, decentralization becomes optimal when coordination becomes very important. When coordination costs are symmetric, decentralization dominates centralization irrespective of the magnitude of externalities and the heterogeneity of preferences. In the case of discontinuous network effects, standardization never Pareto dominates decentralization.

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confidence: 92%

Coordination in Heterogeneous Federal Systems

Loeper

2011

SSRN Journal

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“…Contributions that follow this line of argument are, for instance, Bucovetsky, Marchand and Pestieau (1998), Cornes (2000), Bordignon, Manasse and Tabellini (2001), Huber and Runkel (2006) and Breuillé and GaryBobo (2007). 5 Nonetheless, complete information about citizens' preferences is unlikely even at the local level.…”

Section: Figure 2: Graphical Representation Decentralization Theoremmentioning

confidence: 94%

Federalism and Optimal Allocation Across Levels of Governance

Konrad

Geys

2010

SSRN Journal

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Countries differ in their governmental architectures and in the rules that describe the allocation of tasks, rights and duties across the various levels of government. In this paper, we present a short and selective survey of the development of the theory of optimal allocation of rights and duties along the vertical dimension in federations. We thereby first discuss the multiple trade-offs brought forward in the literature; these make that an ideal allocation of actual tasks across levels of government may be difficult, if not impossible, to attain. Then we turn to the consequences of a sub-optimal allocation of tasks and discuss spillover effects, strategic interactions between jurisdictions and intergovernmental competition. Throughout the review, we highlight paths in need of further research such that, in time, we will have a more solid ground for policy advice. ZUSAMMENFASSUNG Föderalismus und optimale Allokation über RegierungsebenenStaaten unterscheiden sich hinsichtlich ihres Regierungsaufbaus und ihren Verteilungsregeln von Aufgaben, Rechten und Pflichten über die verschiedenen Regierungsebenen hinweg. In diesem Artikel stellen wir eine kurze und selektive Übersicht über die Entwicklung der Theorie der optimalen Allokation von Rechten und Pflichten entlang der vertikalen Dimension in Staatenbünden vor. Wir diskutieren dabei zuerst die vielfachen, in der Literatur beschriebenen, Trade-offs. Diese führen dazu, dass eine ideale Verteilung der tatsächlichen Aufgaben schwierig, wenn nicht unmöglich zu erzielen ist. Als nächstes wenden wir uns den Konsequenzen der sub-optimalen Aufgabenverteilung zu und diskutieren externe Effekte, strategische Interaktionen zwischen den verschiedenen Gebietskörperschaften und zwischenstaatlichen Wettbewerb. Im gesamten Überblicksartikel stellen wir mögliche Pfade für notwendige weitere Forschung heraus, mit der für die Zukunft eine solide Grundlage für Politikberatung gelegt werden kann.1

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“…12 In the first stage, the principal (federal or local government) either allocates authority over the choice of the policy vector to the agent or retains authority. Centralization refers to the scheme in which the federal government decides on the policy vector, whereas under decentralization control rights are allocated to the local governments.…”

Section: Modeling Communication Between Government Levelsmentioning

confidence: 99%

Information Transmission within Federal Fiscal Architectures: Theory and Evidence

et al. 2013

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This paper explores the role of information transmission and misaligned interests across levels of governments in explaining variation in the degree of decentralization across countries. We analyze two alternative policy-decision schemes-'decentralization' and 'centralization'-within a two-sided incomplete information principal-agent framework. The quality of communication depends on the conflict of interests between the government levels and on which government level controls the degree of decentralization. We show that the extent of misaligned interests and the relative importance of local and central government knowledge affect the optimal choice of policydecision schemes. Our empirical analysis shows that countries' choices depend on the relative importance of their private information. Importantly, the results differ significantly between unitary and federal countries, in line with our theory.

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Tax Competition and Revelation of Preferences for Public Expenditure

Cited by 63 publications

References 4 publications

Coordination in Heterogeneous Federal Systems

Coordination in Heterogeneous Federal Systems

Federalism and Optimal Allocation Across Levels of Governance

Information Transmission within Federal Fiscal Architectures: Theory and Evidence

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