Electoral Competition, Decentralization, and Public Investment Underprovision

Author: Magnani, Marco

Source: Journal of Institutional and Theoretical Economics JITE, Volume 166, Number 2, June 2010 , pp. 321-343(23)

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Abstract:

The paper analyzes the optimal level of decentralization in local-public-good provision. Although all voters pay for such investments, only a subset benefit from them; their rate of return, however, is positive. Through pork-barrel projects, which do not increase welfare, any resource allocation is realizable. Candidates competing in local and national elections therefore face a trade-off between targetability and efficiency, which causes some profitable projects to be discarded. Decentralization affects underinvestment because the share of the electorate who benefit from an investment and the share of total budget absorbed by its costs depend on the size of that electorate.

Document Type: Research article

DOI: http://dx.doi.org/10.1628/093245610791343058

Publication date: 2010-06-01

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Founded as Zeitschrift f�r die gesamte Staatswissenschaft in 1844.

As one of the oldest journals in the field of political economy, the Journal of Institutional and Theoretical Economics (JITE) deals traditionally with the problems of economics, social policy, and their legal framework. JITE is listed in the Journal of Economic Literature, the Social Science Citation Index, the International Bibliography of the Social Sciences, and COREJ.
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