The economic theory of federalism is largely built around the premise that more heterogeneous preferences result in more decentralized policy-making. Despite its prominence and importance, this central tenet of economic federalism has never been empirically evaluated. This paper presents the...

The conventional wisdom is that government decentralization promotes policy innovation because it allows for several simultaneous experiments by local governments. However, there is also a learning externality because successful policy experiments provide useful information to all governments....

The economic theory of federalism is largely built around the premise that more heterogeneous preferences result in more decentralized policy making. Despite its prominence and importance, this central tenet of economic federalism has never been empirically evaluated. This paper presents the...