Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/38972
Authors: 
Aidt, Toke
Dutta, Jayasri
Year of Publication: 
2010
Series/Report no.: 
CESifo working paper Public Choice 3022
Abstract: 
We study the efficient allocation of spending and taxation authority in a federation in which federal politicians are exposed to electoral uncertainty. We show that centralization may, but need not, result in a loss of electoral accountability. We identify an important asymmetry between positive and negative externalities and show that centralization may not be efficient in economies with positive externalities even when regions are identical and centralization does not entail a loss of accountability. We also show that decentralization can only Pareto dominate centralization in economies with negative externalities.
Subjects: 
fiscal federalism
local public goods
externalities
performance voting
turnout uncertainty
electoral accountability
JEL: 
D72
D78
H41
Document Type: 
Working Paper

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