Interregional Bargaining and Minority Welfare in Public Good Provision under Representative Democracy
17 Pages Posted: 28 Oct 2016
Date Written: October 27, 2016
We revisit Gradstein’s (2004) model of bargaining between two regions under representative democracy. Although our analysis is built on his model, we obtain results different from his. We show that if a minority region reaps sufficiently large benefits from a public good and its population is sufficiently large, then the bargaining benefits the entire economy. However, even if the bargaining benefits the entire economy, it may not be for the minority region. We show that the surplus of the minority region improves if and only if the minority region’s benefit from the public good and its population take large values.
Keywords: Public Goods, Strategic Delegation, Bargaining, Spillover
JEL Classification: D62, D72, H41, H77
Suggested Citation: Suggested Citation