Political centralization and government accountability

Federico Boffa, Amedeo Piolatto and Giacomo Ponzetto

Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra

Abstract: This paper explains why decentralization can undermine accountability and answers three questions: what determines if power should be centralized or decentralized when regions are heterogeneous? How many levels of government should there be? How should state borders be drawn? We develop a model of political agency in which voters differ in their ability to monitor rent-seeking politicians. We find that rent extraction is a decreasing and convex function of the share of informed voters, because voter information improves monitoring but also reduces the appeal of holding office. As a result, information heterogeneity pushes toward centralization to reduce rent extraction. Taste heterogeneity pulls instead toward decentralization to match local preferences. Our model thus implies that optimal borders should cluster by tastes but ensure diversity of information. We also find economies of scope in accountability that explain why multiplying government tiers harms efficiency. A single government in charge of many policies has better incentives than many special-purpose governments splitting its budget and responsibilities. Hence, a federal system is desirable only if information varies enough across regions.

Keywords: Federalism; Government Accountability; Imperfect Information; Interregional Heterogeneity; Elections. (search for similar items in EconPapers)
JEL-codes: D72 D82 H73 H77 (search for similar items in EconPapers)
Date: 2011-10, Revised 2015-07
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (36)

Downloads: (external link)
https://econ-papers.upf.edu/papers/1335.pdf Whole Paper (application/pdf)

Related works:
Journal Article: Political Centralization and Government Accountability (2016)
Working Paper: Should Different People Have Different Governments? (2015)
Working Paper: Should Different People Have Different Governments? (2015)
Working Paper: Centralization and accountability: Theory and evidence from the Clear Air Act (2013)
Working Paper: Centralization and Accountability: Theory and Evidence from the Clean Air Act (2012)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:upf:upfgen:1335

Access Statistics for this paper

More papers in Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra
Bibliographic data for series maintained by ( this e-mail address is bad, please contact ).