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Government and Cities: Contests and the Decentralization of Decision Making

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  • Epstein, Gil S.

    (Bar-Ilan University)

  • Gang, Ira N.

    (Rutgers University)

Abstract

Governments do not have perfect information regarding the priorities and the needs of different groups in the economy. This lack of knowledge opens the door for different groups to lobby the government in order to receive the government’s support. We set up a model of hierarchical contests and compare the implications of a centralized allocation process with a decentralized allocation process. We show the potential existence of a poverty trap as a result of fiscal federalism.

Suggested Citation

  • Epstein, Gil S. & Gang, Ira N., 2002. "Government and Cities: Contests and the Decentralization of Decision Making," IZA Discussion Papers 547, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp547
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    References listed on IDEAS

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    Cited by:

    1. Gil Epstein & Ira Gang, 2007. "Understanding the development of fundamentalism," Public Choice, Springer, vol. 132(3), pages 257-271, September.
    2. Gil S. Epstein & Ira N. Gang, 2016. "Taxation, social protection, and governance decentralization," WIDER Working Paper Series wp-2016-101, World Institute for Development Economic Research (UNU-WIDER).
    3. Gil S. Epstein & Ira N. Gang, 2006. "Contests, NGOs, and Decentralizing Aid," Review of Development Economics, Wiley Blackwell, vol. 10(2), pages 285-296, May.
    4. Epstein, Gil S. & Gang, Ira N., 2019. "Taxation and social protection under governance decentralisation," European Journal of Political Economy, Elsevier, vol. 60(C).
    5. Gil S. Epstein & Ira N. Gang, 2016. "Taxation, social protection, and governance decentralization," WIDER Working Paper Series 101, World Institute for Development Economic Research (UNU-WIDER).

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    More about this item

    Keywords

    fiscal federalism; economic models of political processes; contests; rentseeking; intergovernmental relations; interjurisdictional differentials and their effects;
    All these keywords.

    JEL classification:

    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects

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