Creator: Bednar, Jenna. Series: Law and economics of federalism Abstract:
Federal systems are crippled by power grabbing between central and regional governments, as well as burden-shifting schemes between regions. Existing models of federalisms assume regional diversity to account for inter-regional tension. However, these models set aside entirely the problem of inter-level competition. This paper presents a unified framework for understanding threats to federal stability. The model's n + 1 structure accomodates both dimensions of federal instability. Furthermore, this paper is able to offer a theoretical alternative to explanations of instability that rely upon regional diversity or citizen patriotism; identically selfish preferences, in the decentralized setting, can generate instability. Additionally, under certain institutional conditions, the paper offers an equilibrium that embraces the persistence of competition in a stable federation.
Keyword: Federalism, Decentralization, and Federal instability Subject (JEL): H11 - Structure and scope of government - Structure, scope, and performance of government and H77 - State and local government ; Intergovernmental relations - Intergovernmental relations ; Federalism ; Secession