Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/322640 
Year of Publication: 
2004
Series/Report no.: 
Discussion Papers Series No. 04-09
Publisher: 
Utrecht University, Utrecht School of Economics, Tjalling C. Koopmans Research Institute, Utrecht
Abstract: 
We provide an explanation for why centralisation of political decision making results in overspending in some policy domains, whereas toolow spending persists in others. We study a model in which delegates from jurisdictions bargain over local public goods provision. If all of thecosts of public goods are shared through a common budget, policymakers delegate bargaining to `public good lovers', resulting inoverprovision of public goods. If a sufficiently large part of the costs can no be shared, underprovision persists because policy makers delegate bargaining to `conservatives'. We derive financing rules that eliminate the incentives for strategic delegation.Keywords: Centralised decision making, strategic delegation, financing rules.
Subjects: 
Centralised decision making
strategic delegation
financing rules
Document Type: 
Working Paper

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