Federal Directives, Local Discretion and the Majority Rule

I consider a heterogeneous federal system in which policy coordination is desirable but underprovided in the absence of a federal intervention. To improve policy coordination, the federal layer can intervene by imposing bounds on local policies. These federal bounds define a restricted policy space within which local jurisdictions have residual discretion. I analyze a voting game in which the federal bounds are determined directly by the citizens via federal majority rule.