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Exit and Voice. Yardstick versus Fiscal Competition across Governments

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  • Massimo Bordignon

Abstract

Politicians are disciplined through the electoral system. But this is often not enough to eliminate political rents. Economists suggest that competition across governments may also help. But intergovernmental competition can take two forms, through tax competition (exit) or yardstick competition (voice). We show these two forms may not, and in general do not, work in the same direction. Tax competition may reduce the screening properties of yardstick competition.

Suggested Citation

  • Massimo Bordignon, 2007. "Exit and Voice. Yardstick versus Fiscal Competition across Governments," CESifo Working Paper Series 2069, CESifo.
    • Handle: RePEc:ces:ceswps:_2069
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    References listed on IDEAS

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    1. Bordignon, Massimo & Cerniglia, Floriana & Revelli, Federico, 2004. "Yardstick competition in intergovernmental relationships: theory and empirical predictions," Economics Letters, Elsevier, vol. 83(3), pages 325-333, June.
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    Cited by:

    1. Revelli, Federico, 2019. "The electoral migration cycle," European Journal of Political Economy, Elsevier, vol. 59(C), pages 461-482.
    2. repec:dau:papers:123456789/6913 is not listed on IDEAS

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    More about this item

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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