Why Local Governments Do Not Maximize Profits: On the Value Added by the Representative Institutions of Town and City Governance
33 Pages Posted: 19 Feb 2011 Last revised: 16 Jun 2011
There are 2 versions of this paper
Why Local Governments Do Not Maximize Profits: On the Value Added by the Representative Institutions of Town and City Governance
Why Local Governments Do Not Maximize Profits: On the Value Added by the Representative Institutions of Town and City Governance
Date Written: May 21, 2011
Abstract
This paper provides an explanation for the lack of profit-maximizing governments and for widespread use of more or less representative forms of local governance based on economic, rather than political, considerations. The analytical part of the paper suggests that profit-maximizing governments suffer from a "proprietor's dilemma," which can be reduced by including a representative council with veto power over new taxes. Limited but costly mobility plays a role in the analysis, as does the fact that residents often make investments in a town that are difficult to relocate once made.
Keywords: constitutional political economy, local government, constitutional history, public choice
JEL Classification: D70, H70, N4
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
On the Durability of King and Council: The Continuum between Dictatorship and Democracy
-
A Theory of Menu Federalism: Decentralization by Political Agreement
By Andreas P. Kyriacou, Jordi Bacaria, ...