Lockwood, Ben (2000) The assignment of powers in Federal and Unitary States. Working Paper. University of Warwick, Department of Economics, Coventry.

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Abstract

This paper studies a model where the power to set policy (a choice of project) may be assigned to central or regional government via either a federal or unitary referendum (constitutional rule, CR). The benefit of central provision is an economy of scale, while the cost is political inefficiency. The relationship between federal and unitary CRs is characterized in the asymptotic case as the number of regions becomes large, under the assumption that the median project benefit in any region is a random draw from a fixed distribution, G. Under some symmetry assumptions, the relationship depends only on the shape of G, not on how willingnesses to pay are distributed within regions. The relationship to Cremer and Palfrey's (1996) "principle of aggregation" is established. Asymptotic results on the efficiency of the two CRs are also provided.

Item Type:	Working or Discussion Paper (Working Paper)
Subjects:	J Political Science > JA Political science (General)
Divisions:	Faculty of Social Sciences > Economics
Library of Congress Subject Headings (LCSH):	Decentralization in government, Intergovernmental fiscal relations, Referendum, Constitutional law
Series Name:	Warwick economic research papers
Publisher:	University of Warwick, Department of Economics
Place of Publication:	Coventry
Date:	June 2000
Number:	No.569
Number of Pages:	33
Status:	Not Peer Reviewed
Access rights to Published version:	Open Access
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URI:	http://wrap.warwick.ac.uk/id/eprint/1609

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