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Yardstick competition: which neighbours matter?

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  • Eric Dubois
  • Sonia Paty

Abstract

This paper aims at testing the existence of yardstick competition by estimating a fully specified vote-function on a panel data set of 104 French local governments from 1989 to 2001. When comparing the performance of their incumbent to the one of their "neighbours", voters might consider their close geographical neighbours but also the nearby cities that are similar according to some socio-economic characteristics such as population size. The estimation results show that voters sanction their incumbent if their own local housing tax is high. Moreover, we find that voters reward their incumbent when neighbouring cities that are similar in terms of demographic characteristics have high local taxes.
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Suggested Citation

  • Eric Dubois & Sonia Paty, 2010. "Yardstick competition: which neighbours matter?," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 44(3), pages 433-452, June.
    • Handle: RePEc:spr:anresc:v:44:y:2010:i:3:p:433-452
    DOI: 10.1007/s00168-008-0273-4
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    More about this item

    Keywords

    H2; H3; H7; D72;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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