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The Stability of Multi-Level Governments

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  • Enriqueta Aragonès
  • Clara Ponsatí

Abstract

This paper studies the stability of a multi-level government. We analyze an extensive form game played between two politicians leading two levels of government. We characterize the conditions that render such government structures stable. We also show that if leaders care about electoral rents and the preferences of the constituencies at different levels are misaligned, then the decentralized government structure may be unsustainable. This result is puzzling because, from a normative perspective, the optimality of decentralized decisions via a multi-level government structure is relevant precisely when different territorial constituencies exhibit preference heterogeneity.

Suggested Citation

  • Enriqueta Aragonès & Clara Ponsatí, 2019. "The Stability of Multi-Level Governments," Working Papers 1109, Barcelona School of Economics.
    • Handle: RePEc:bge:wpaper:1109
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    multi-level governments; repression;

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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