Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/25848
Authors: 
Schnellenbach, Jan
Feld, Lars P.
Schaltegger, Christoph A.
Year of Publication: 
2006
Series/Report no.: 
CESifo working paper 1803
Abstract: 
The paper compares decision-making on the centralisation of public goods provision in the presence of regional externalities under representative and direct democratic institutions. A model with two regions, two public goods and regional spillovers is developed in which uncertainty over the true preferences of candidates makes strategic delegation impossible. Instead, it is shown that the existence of rent extraction by delegates alone suffices to make cooperative centralisation more likely through representative democracy. In the noncooperative case, the more extensive possibilities for institutional design under representative democracy increase the likelihood of centralisation. Direct democracy may thus be interpreted as a federalism-preserving institution.
JEL: 
H73
H77
D78
Document Type: 
Working Paper

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