Government competition is often invoked as one of the main advantage of decentralization. But competition across governments can take two forms, through tax competition (exit) or yardstick competition (voice). We show these two forms may affect political equilibria in opposite directions. Tax competition increases the disciplining effect of elections on politicians, but it reduces the selection effect. Yardstick competition works in just the opposite direction. However, the two forms of competition may be complementary as expected welfare is concerned.

Bordignon, M., Exit and Voice: Yardstick Versus Fiscal Competition Across Governments, <<ITALIAN ECONOMIC JOURNAL>>, 2015; 1 (Issue 1): 117-137. [doi:10.1007/s40797-015-0012-9] [http://hdl.handle.net/10807/65177]

Exit and Voice: Yardstick Versus Fiscal Competition Across Governments

Bordignon, Massimo
2015

Abstract

Government competition is often invoked as one of the main advantage of decentralization. But competition across governments can take two forms, through tax competition (exit) or yardstick competition (voice). We show these two forms may affect political equilibria in opposite directions. Tax competition increases the disciplining effect of elections on politicians, but it reduces the selection effect. Yardstick competition works in just the opposite direction. However, the two forms of competition may be complementary as expected welfare is concerned.
Inglese
Bordignon, M., Exit and Voice: Yardstick Versus Fiscal Competition Across Governments, <<ITALIAN ECONOMIC JOURNAL>>, 2015; 1 (Issue 1): 117-137. [doi:10.1007/s40797-015-0012-9] [http://hdl.handle.net/10807/65177]
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/10807/65177
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