Book contents
- Frontmatter
- Contents
- List of Figures and Tables
- Preface
- Glossary of Main Notation Used
- 1 INTRODUCTION
- 2 THE POLITICAL PROCESS
- 3 ADMINISTRATIVE EFFICIENCY
- 4 COMPETITION AMONG GOVERNMENTS
- 5 FISCAL POLICY AND REDISTRIBUTION
- 6 FISCAL COORDINATION AND INCENTIVES
- 7 CITIZENS AND GOVERNMENT
- 8 CHECKS, BALANCES, AND FREEDOM
- 9 ACQUIRING AND USING KNOWLEDGE
- 10 ETHNIC CONFLICT AND SECESSION
- 11 DATA TO THE RESCUE?
- 12 CONCLUSION: RETHINKING DECENTRALIZATION
- References
- Index
- Titles in the series
6 - FISCAL COORDINATION AND INCENTIVES
Published online by Cambridge University Press: 05 June 2012
- Frontmatter
- Contents
- List of Figures and Tables
- Preface
- Glossary of Main Notation Used
- 1 INTRODUCTION
- 2 THE POLITICAL PROCESS
- 3 ADMINISTRATIVE EFFICIENCY
- 4 COMPETITION AMONG GOVERNMENTS
- 5 FISCAL POLICY AND REDISTRIBUTION
- 6 FISCAL COORDINATION AND INCENTIVES
- 7 CITIZENS AND GOVERNMENT
- 8 CHECKS, BALANCES, AND FREEDOM
- 9 ACQUIRING AND USING KNOWLEDGE
- 10 ETHNIC CONFLICT AND SECESSION
- 11 DATA TO THE RESCUE?
- 12 CONCLUSION: RETHINKING DECENTRALIZATION
- References
- Index
- Titles in the series
Summary
The benefits of federalism derive from the operation of vertical competition … politicians at a given jurisdictional level will assess the performance of governments inhabiting other tiers. If they come to the conclusion that they can do better than these governments, they will act on that conviction.
Albert Breton (2000, pp. 6–7)When tax rights over a tax base are divided among more than one government, the tax base becomes a common property resource … as more independent tax agencies share the same tax base, the standard tragedy of the commons problem emerges and the commons – the tax base – is “over-grazed,” leading to an equilibrium with an excessively high aggregate tax rate, meager aggregate tax collections, deficient provision of public goods, low investment and low output.
Daniel Berkowitz and Wei Li (2000, p. 371)Competition between local and central governments can take many forms. In Chapter 5, I explored how local governments may blackmail central officials into playing Santa Claus, pressuring them to make unplanned fiscal transfers. But even if no such transfers were possible, the two levels would still try to outmaneuver each other in various ways. An element of competition arises inevitably from the fact that the two levels are governing the same citizens. Depending on whether they are benevolent or predatory, the governments may compete to please their common beneficiaries or exploit their common victims.
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- Chapter
- Information
- The Architecture of GovernmentRethinking Political Decentralization, pp. 137 - 155Publisher: Cambridge University PressPrint publication year: 2007