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Pooling sovereignty under the subsidiary principle

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  • Giuranno, Michele G.

Abstract

This paper investigates the decision whether to centralize public policy in an economy with two levels of government. I show that centralization based on the subsidiarity principle emphasizes rather than resolves a conflict of interest between jurisdictions. The extent of the conflict of interest depends on spillovers and differences in tastes for public spending. Spending decisions are determined by negotiation between local representatives in the centralized legislature. If an agreement cannot be reached, policy is determined non-cooperatively by local governments. Results show that pooling sovereignty by the subsidiarity principle fails to fully internalize spillovers and may lead to a misallocation of public resources.

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  • Giuranno, Michele G., 2010. "Pooling sovereignty under the subsidiary principle," European Journal of Political Economy, Elsevier, vol. 26(1), pages 125-136, March.
    • Handle: RePEc:eee:poleco:v:26:y:2010:i:1:p:125-136
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    Cited by:

    1. Giuranno, Michele G. & Nocco, Antonella, 2020. "Trade tariff, wage gap and public spending," Economic Modelling, Elsevier, vol. 91(C), pages 167-179.
    2. Martin Gregor, 2012. "Modeling positive inter-jurisdictional public spending spillovers," Working Papers IES 2012/16, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Jun 2012.
    3. Giuseppe Liddo & Michele G. Giuranno, 2020. "The political economy of municipal consortia and municipal mergers," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 37(1), pages 105-135, April.
    4. Di Liddo, Giuseppe, 2017. "Are local agreements on equalization grants possible? A bargaining model with quasi-linear local preferences on local public goods," Economics Letters, Elsevier, vol. 153(C), pages 9-11.
    5. Martin Gregor & Lenka Stastna, 2012. "The decentralization tradeoff for complementary spillovers," Review of Economic Design, Springer;Society for Economic Design, vol. 16(1), pages 41-69, March.
    6. Fabio Fiorillo & Michele G. Giuranno & Agnese Sacchi, 2021. "Asymmetric decentralization: distortions and opportunities," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 38(2), pages 625-656, July.
    7. Giuranno Michele G. & Biswas Rongili, 2019. "Internal Migration and Public Policy," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 19(4), pages 1-16, October.
    8. Janos Feidler & Klaas Staal, 2012. "Centralized and decentralized provision of public goods," Economics of Governance, Springer, vol. 13(1), pages 73-93, March.
    9. Schaltegger, Christoph A. & Somogyi, Frank & Sturm, Jan-Egbert, 2011. "Tax competition and income sorting: Evidence from the Zurich metropolitan area," European Journal of Political Economy, Elsevier, vol. 27(3), pages 455-470, September.
    10. Aguirre, Alvaro, 2016. "The risk of civil conflicts as a determinant of political institutions," European Journal of Political Economy, Elsevier, vol. 42(C), pages 36-59.
    11. Giuranno, Michele G. & Rongili, Biswas, 2012. "Inter-jurisdictional migration and the size of government," MPRA Paper 42604, University Library of Munich, Germany.

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