The paper analyzes the conditions under which the smaller of two otherwise identical countries prefers the non-cooperative Nash equilibrium to a situation of fully harmonized tax rates. A standard two-country model of capital tax competition is extended by allowing for transaction costs,...

The Coase Theorem states that costless enforcement of voluntary agreements yields efficient outcomes. We argue that previous treatments fail to recognize the full meaning of voluntariness: it requires a two-stage game; a non-cooperative participation decision, followed by Coaseian bargaining only...

In Japan, a formula-based transfer system resulted in local benefits from municipal mergers differing substantially from national benefits. A change in this transfer policy and the mergers that resulted are analyzed using a structural model involving private consumption, public good quality, and...

Does electoral fraud affect development? In a weak institutional environment the answer is not obvious. This paper demonstrates that electoral fraud can lower development and this effect is mediated through the partisan control of electoral institutions and the resultant ability of the incumbent...

To explore the propagation of undesirable policies in a form of populist extremism, we construct a social learning model featuring agency problems. Politicians in different countries sequentially implement a policy. Voters learn the incumbent politician's type and the desirable policy by...

We examine whether the strategic delegation problem in interregional negotiations can be solved by a governmental policy. It is well known that when an interregional negotiation is delegated to representatives, each region elects its representative strategically, resulting in inefficient...

This paper takes a mechanism design approach to federalism and assumes that local preferences are the private information of local jurisdictions. Contractual federalism is defined as a strategy-proof contract among the members of the federation supervised by a benevolent but not omniscient...

The concept of fair representation of voters in a committee representing different voters' groups, such as national representations in union of states, is discussed. This concept, introduced into discussion about voting rights in the Council of European Union in 2004, was narrowed to proposal of...

The European Union (EU) is not de jure a federation, but after 50 years of institutional evolution it possesses attributes of a federal state. One can conclude that EU is something betweenʺ federation and intergovernmental organization. If we measure something betweenʺ by interval [0, 1],...