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Yardstick competition and fiscal disparities: an experimental study

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  • Di Liddo, Giuseppe
  • Morone, Andrea

Abstract

Recent theoretical research suggest that yardstick competition may be biased by the presence of fiscal disparities between local governments and that fiscal equalization may help in correcting this bias. This paper provides an empirical test of these theoretical predictions by means of a laboratory experiment.

Suggested Citation

  • Di Liddo, Giuseppe & Morone, Andrea, 2017. "Yardstick competition and fiscal disparities: an experimental study," MPRA Paper 79853, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:79853
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    References listed on IDEAS

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    1. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer;Economic Science Association, vol. 10(2), pages 171-178, June.
    2. R. Mark Isaac & James M. Walker, 1988. "Group Size Effects in Public Goods Provision: The Voluntary Contributions Mechanism," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 103(1), pages 179-199.
    3. Besley, Timothy & Smart, Michael, 2007. "Fiscal restraints and voter welfare," Journal of Public Economics, Elsevier, vol. 91(3-4), pages 755-773, April.
    4. Bordignon, Massimo & Cerniglia, Floriana & Revelli, Federico, 2003. "In search of yardstick competition: a spatial analysis of Italian municipality property tax setting," Journal of Urban Economics, Elsevier, vol. 54(2), pages 199-217, September.
    5. Buettner, Thiess & von Schwerin, Axel, 2016. "Yardstick competition and partial coordination: Exploring the empirical distribution of local business tax rates," Journal of Economic Behavior & Organization, Elsevier, vol. 124(C), pages 178-201.
    6. Besley, Timothy & Case, Anne, 1995. "Incumbent Behavior: Vote-Seeking, Tax-Setting, and Yardstick Competition," American Economic Review, American Economic Association, vol. 85(1), pages 25-45, March.
    7. Hansjörg Blöchliger & Claire Charbit, 2008. "Fiscal equalisation," OECD Journal: Economic Studies, OECD Publishing, vol. 2008(1), pages 1-22.
    8. Di Liddo, Giuseppe & Giuranno, Michele G., 2016. "Asymmetric yardstick competition and municipal cooperation," Economics Letters, Elsevier, vol. 141(C), pages 64-66.
    9. Allers, Maarten A., 2012. "Yardstick competition, fiscal disparities, and equalization," Economics Letters, Elsevier, vol. 117(1), pages 4-6.
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    Citations

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    Cited by:

    1. Giuseppe Di Liddo & Annalisa Vinella, 2022. "Asymmetric yardstick competition: traditional procurement versus public-private partnerships," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 8(3), pages 669-695, November.
    2. Bonev, Petyo & Glachant, Matthieu & Söderberg, Magnus, 2022. "Implicit yardstick competition between heating monopolies in urban areas: Theory and evidence from Sweden," Energy Economics, Elsevier, vol. 109(C).
    3. Giuseppe Liddo & Andrea Morone, 2023. "Local income inequality, rent-seeking detection, and equalization: a laboratory experiment," Public Choice, Springer, vol. 196(3), pages 257-275, September.

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    More about this item

    Keywords

    yardstick competition; fiscal equalization; experiment.;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • H76 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Other Expenditure Categories

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