In a model with democratic institutions and three jurisdictions, we study the allocation and welfare in a one-level (unitary) and a two-level (federal) government, given that the central government finds it optimal to discriminate in favor of two jurisdictions and against the third. Favored...

In a probabilistic voting model with three jurisdictions with residents with different income levels, we demonstrate that it is always optimal to distribute tax revenues as public good to only the residents of richest and median income jurisdictions. In this context, we compare the overall...