Public Goods in Federal Systems

40 Pages Posted: 6 Mar 2006

See all articles by Catherine Hafer

Catherine Hafer

New York University (NYU) - Wilf Family Department of Politics

Dimitri Landa

New York University (NYU) - Wilf Family Department of Politics

Date Written: October 12, 2004

Abstract

We study a politico-economic model of federations with both federal and supplemental regional provision of a local (impure) public good with spillover effects. Regional differences in average income levels and externalities of provision induce differences in preferences over federal and regional levels of provision. Although the voters' preferences are not single-peaked, we provide sufficient conditions for the existence of a voting equilibrium and characterize its properties under alternative federal institutional arrangements. The voting equilibrium is unique but displays markedly different substantive characteristics under different conditions on parameters. We show that the inter-regional redistributive tensions present in federations lead to differences in regional preferences over federal institutions and may help to explain otherwise puzzling patterns in state support for federal programs.

Keywords: public goods, spillovers, federalism, political economy, centralization

JEL Classification: H23, H41

Suggested Citation

Hafer, Catherine and Landa, Dimitri, Public Goods in Federal Systems (October 12, 2004). Available at SSRN: https://ssrn.com/abstract=887518 or http://dx.doi.org/10.2139/ssrn.887518

Catherine Hafer (Contact Author)

New York University (NYU) - Wilf Family Department of Politics ( email )

715 Broadway
New York, NY 10003
United States

Dimitri Landa

New York University (NYU) - Wilf Family Department of Politics ( email )

715 Broadway
New York, NY 10003
United States

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