Centralized tax administration is the hallmark of the modern fiscal state. This paper evaluates a commitment problem inherent in establishing fiscal centralization: could states credibly promise to use centralized tax revenues to finance prespecified local government expenditures? We examine how...

Centralized tax administration is the hallmark of the modern fiscal state. This paper evaluates a commitment problem inherent in establishing fiscal centralization: could states credibly promise to use centralized tax revenues to finance prespecified local government expenditures? We examine how...

Differences in information between senders and receivers can result in inefficiency due to adverse selection or moral hazard. Therefore, one critical issue of organization design is how to induce truth-telling from the informed but biased agent by restructuring organizational forms. This study...