Public Goods in Federal Systems

Catherine Hafer, Dimitri Landa
2004 Social Science Research Network  
We study a politico-economic model of federations with both federal and supplemental regional provision of a local public good with spillover effects. Regional differences in median income levels and externalities of provision induce differences in preferences over federal and regional levels of provision. Although the voters' preferences are not single-peaked, we provide sufficient conditions for the existence of a voting equilibrium and characterize its properties under alternative federal
more » ... titutional arrangements. We show that the inter-regional redistributive tensions present in federations lead to differences in regional preferences over federal institutions and may explain otherwise puzzling patterns in state support for federal programs. * We are grateful to
doi:10.2139/ssrn.887518 fatcat:fiumgb6pkfhsxhc3hus5ahbiwy