DP2046 | Distributive Politics and the Costs of Centralization

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18/12/1998

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Abstract

This paper integrates the distributive politics literature with the literature on decentralization by incorporating inter-regional project externalities into a standard model of distributive policy. A key finding is that the degree of uniformity (or 'universalism') of the provision of regional projects is endogenous and depends on the strength of the externality. The efficiency of decentralization and the performance of 'constitutional rules' (such as majority voting) which may be used to choose between decentralization and centralization are then discussed in this framework. Stronger externalities and more heterogeneity between regions need not imply that decentralization becomes more efficient.