Optimal provision of public goods under imperfect intergovernmental competition

The aim of this paper is to develop a model that includes two tiers of government providing public goods with the same tax base to finance them. Their rent is related to the level of competition. Citizens maximize their own utility starting from these different levels of competition. Therefore, they can decide to turn down the governments to induce them to behave efficiently. Moreover, governments can choose whether to accept the behaviour urged by citizens or to maximize their rent for a single period of office and consequently lose the next elections.