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Bravo, Ana
Silvestre, Antonio
Year of Publication: 
Series/Report no.: 
46th Congress of the European Regional Science Association: "Enlargement, Southern Europe and the Mediterranean", August 30th - September 3rd, 2006, Volos, Greece
This paper aims at presenting a simple model of local decision-making based on the hypothesis of monopoly power on the part of local governments. It adds the contribution of the principal-agent theory by assuming that: (a) monopolistic behavior is constrained by voters' efforts to monitor the outcomes of policies; (b) local governments' policies affect local property values. Given those assumptions, the degree of capitalization of property taxes is shown to determine the incentive for voters' control over policies' outcomes.
Document Type: 
Conference Paper

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