Electoral Competition and Incentives to Local Public Good Provision

Local public good provision from different government levels is subject to many bias coming from the political process; incentives indeed, vary with the size of the beneficiaries’ set and costs may affect the results of political competition by reducing total resources available for redistribution. Present work represents a first attempt to look at these issues together; indeed, it considers the situation where politicians have a finite budget to use both for redistributive policies and for the provision of a public good that affects the utility of a fraction of the electorate. In this setting it is not enough that benefits balance costs, in order for the public good to be implemented; the required level of efficiency moreover, is influenced by benefits concentration. If those interested in the public good are less than half of the electorate, concentration increases the efficiency threshold; on the contrary if they amount for more, benefits concentration decreases the required level of efficiency. Classification-JEL: D72, H41