The Economics of Federalism
Larry E. Ribstein (Deceased)
University of Illinois College of Law; PERC - Property and Environment Research Center
Bruce H. Kobayashi
George Mason University - School of Law
January 6, 2006
U Illinois Law & Economics Research Paper No. LE06-001
George Mason Law & Economics Research Paper No. 06-15
This is the introductory essay for the Economics of Federalism, a book edited by the authors and forthcoming in Edward Elgar Publishing's ECONOMIC APPROACHES TO LAW series. This essay discusses the major issues and theories concerning federal political systems, which we define as systems that have a hierarchy of at least two distinct state and central levels, each with a well-defined scope of authority. The essay discusses two branches the economics literature. The first branch, on competitive federalism, stems from Tiebout's 1956 article. It focuses on the horizontal structure of federalism and examines jurisdictional competition between state governments for mobile individuals and resources. The second branch of the literature, on fiscal federalism, examines the vertical structure of federalism, or the division of public services and taxing power between the central and state governments. The essay also examines applications of the economic analysis of federalism to specific areas of the law, including corporate law, antitrust law, environmental law, choice of law rules, contractual choice of law, and public choice theory.
Number of Pages in PDF File: 25
JEL Classification: K10, P43, H77
Date posted: January 13, 2006
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