Self-Enforcing Federalism

Posted: 29 Dec 2004

See all articles by Rui J.P. de Figueiredo

Rui J.P. de Figueiredo

University of California, Berkeley - Business & Public Policy Group

Barry R. Weingast

Stanford University, Department of Political Science

Abstract

How are constitutional rules sustained? We investigate this problem in the context of how the institutions of federalism are sustained. As Riker (1964) emphasizes, a central design problem of federalism is how to create institutions that at once grant the central government enough authority to provide central goods and police the subunits, but not so much that it usurps all public authority. Using a game theoretic model of institutional choice, we argue that, to survive, federal structures must be self-enforcing: the center and the states must have incentives to fulfill their obligations within the limits of federal bargains. Our model investigates the trade-offs among the benefits from central goods provision, the ability of the center to impose penalties for noncompliance, and the costs of states to exit. We also show that federal constitutions can act as coordinating devices or focal solutions that allow the units to coordinate on trigger strategies in order to police the center. Finally, the model generates a number of comparative statics concerning the degree of central power, the division of rents between the states and the center, and the degree of central goods provided as a function of the characteristics of the constituent units.

Suggested Citation

de Figueiredo, Rui José P. and Weingast, Barry R., Self-Enforcing Federalism. The Journal of Law, Economics, and Organization, Vol. 21, No. 1, pp. 103-135, 2005. Available at SSRN: https://ssrn.com/abstract=635642

Rui José P. De Figueiredo

University of California, Berkeley - Business & Public Policy Group ( email )

545 Student Services Building
Berkeley, CA 94720
United States
510-642-6452 (Phone)
510-643-1412 (Fax)

Barry R. Weingast (Contact Author)

Stanford University, Department of Political Science ( email )

Stanford, CA 94305-6010
United States
650-723-0497 (Phone)
650-723-1808 (Fax)

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