In the presence of spillovers, decentralized provision of local public goods may lead to a higher surplus than centralized provision even if localities have identical preferences. Indeed, free-riding costs associated to decentralization may be larger than the costs of lobbying activities under...

We analyze federal systems of government in which local public policies are financed by general taxation. In a decentralized political system there is, in each region, a vote to elect a local representative while in a centralized political system a single representative is elected by a federal...