Which government functions should be decentralized (resp. centralized) once lobbying behavior is taken into account? We find that the answer largely depends on how the interests of the regional lobbies are positioned with respect to the function to be decentralized (resp. centralized). When...

We consider a federation with two layers of government, in which Leviathan policy makers levy an excise tax on a consumption good that generates a negative externality and that is produced in an imperfectly competitive market. When both layers of government are allowed to tax, policy choices are...

This paper studies the impact of commodity taxes on the sustainability of collusion in imperfectly competitive markets. We consider both a Cournot and a Bertrand supergame with discounting, with collusion being supported by either grim trigger strategies or stick-and-carrot optimal punishments....