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The political economy of fixed regional investment shares with an illustration for Belgian Railway investments

Author

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  • Stef PROOST
  • Vera ZAPOROZHETS

Abstract

Many local public goods are allocated by federal governments using fixed regional shares: every region is entitled a fixed share of the total budget for a particular type of public good. This paper compares this fixed regional sharing rule with two alternative allocation rules: first best and common pool allocation. We find that the fixed regional sharing rule performs relatively well if the regional shares are reasonable. Legislative bargaining theory is used to study the determination of the fixed regional shares.

Suggested Citation

  • Stef PROOST & Vera ZAPOROZHETS, 2010. "The political economy of fixed regional investment shares with an illustration for Belgian Railway investments," Working Papers of Department of Economics, Leuven ces10.05, KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven.
    • Handle: RePEc:ete:ceswps:ces10.05
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    File URL: https://lirias.kuleuven.be/bitstream/123456789/262397/1/DPS1005.pdf
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    Cited by:

    1. Alban Thomas & Vera Zaporozhets, 2017. "Bargaining Over Environmental Budgets: A Political Economy Model with Application to French Water Policy," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 68(2), pages 227-248, October.

    More about this item

    Keywords

    local public goods; political economy; railways;
    All these keywords.

    JEL classification:

    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • L9 - Industrial Organization - - Industry Studies: Transportation and Utilities

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