Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/75655
Authors: 
Gradstein, Mark
Year of Publication: 
2000
Series/Report no.: 
CESifo Working Paper 315
Abstract: 
This paper studies a constitutional framework that enables sustainable federative agreements. In the model, districts decide on local policies and envision the possibility of entering a federation. Focusing on rules for legislative bargaining in the federation, I find that a non-egalitarian bargaining rule, which assigns policy making power to one of the district's representatives is welfare inferior to the decentralized status quo. In contrast, under an egalitarian bargaining procedure, federation yields a welfare superior outcome. The analysis indicates the desirability of making such egalitarian bargaining rules credible.
Document Type: 
Working Paper

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