Public Goods in Federal Systems

Author(s): Catherine Hafer;Dimitri Landa

Source:
    Journal:Quarterly Journal of Political Science
    ISSN Print:1554-0626,  ISSN Online:1554-0634
    Publisher:Now Publishers
    Volume 2 Number 3,

Document Type: Article
Pages: 23 (253-275)
DOI: 10.1561/100.00006001

Abstract: We study a political-economic model of federations with both federal and supplemental regional provision of a local (impure) public good with spillover effects. Regional differences in average income levels and externalities of provision induce differences in preferences over federal and regional levels of provision. Although the voters' preferences are not single-peaked, we provide sufficient conditions for the existence of voting equilibria and characterize their properties under alternative federal institutional arrangements. We show that, under different conditions on parameters, the voting equilibria display markedly different patterns of federal vs. local provision, relying on different political coalitions for their support. We show that the inter-regional redistributive tensions present in federations lead to differences in regional support for different degrees of fiscal (de-)centralization: federation, confederation, and complete centralization.

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