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We analyze a simple model of local public good provision in a country consisting of a large number of heterogeneous regions, each comprising two districts, a city and a village. When districts remain autonomous and local public goods have positive spillover effects on the neighbouring district, there is underprovision of public goods in both the city and the village. When districts unite, underprovision persists in the village (and may even become more severe), whereas overprovision of public goods arises in the city as urbanites use their political power to exploit the villagers. From a social welfare point of view, inhabitants of the village have insufficient incentives to vote for unification. We examine how national transfers to local governments can resolve these problems.

We analyze a simple model of local public good provision in a country consisting of a large number of heterogeneous regions, each comprising two districts, a city and a village. When districts remain autonomous and local public goods have positive spillover effects on the neighbouring district, there is underprovision of public goods in both the city and the village. When districts unite, underprovision persists in the village (and may even become more severe), whereas overprovision of public goods arises in the city as urbanites use their political power to exploit the villagers. From a social welfare point of view, inhabitants of the village have insufficient incentives to vote for unification. We examine how national transfers to local governments can resolve these problems.

AbstractA government sets the level of taxation to provide a public good valued by consumers. There are two groups of consumers, the rich and the poor. The government has redistributive preferences, but is initially constrained to use lump‐sum taxation. This potentially leads the government to provide a very low level of the public good out of concern for not reducing private good consumption of the poor. In this context, allowing a small amount of redistribution from the rich to the poor may be Pareto improving. The loss in private consumption by the rich may be more than offset by the added utility from increased public good provision. I also analyze the extent to which a flat income tax can induce the government to choose a level of public good consistent with the Samuelson condition. When consumers have a survival constraint on private consumption, a progressive tax code is required to induce the government to choose the efficient level of the public good. Generally speaking, there is a trade‐off between a desire to restrain the government's ability to redistribute income and a desire to induce it to choose the level of the public good implied by the Samuelson condition.

The allocation of a government budget between a public good and transfers is modeled under different systems of government. The relatively even distribution of political power among groups in a democracy favors spending on nonexclusive public goods. The more concentrated pattern of political power in a dictatorship favors spending on transfers targeted to powerful groups. The hypothesis on public good provision is examined using cross-country data on public good provision and empirical indicators of political regime. Dictatorial governments are found to provide public schooling, roads, safe water, public sanitation, and pollution control at levels far below democracies.

This paper studies the equilibrium size of countries. Individuals in small countries have greater influence over the nature of political decision mak- ing while individuals in large countries have the advantage of more public goods and lower tax rates. The model implies that (i) there exists excessive incentives to separate, though this need not be the case for all sets of seces- sion rules studied; (ii) an exogenous increase in public spending decreases country size; (iii) countries with a presidential-congressional democracy are larger than countries with a parliamentary democracy.

This article incorporates a political decision process into an urban land use model to predict the likely location of a public good. It fills an important gap in the literature by modeling the endogenous location of open space. The article compares open space decisions made under a majority-rules voting scheme with welfare-improving criterion and finds households tied to a location in space compete against each other for public goods located nearer them. Significant differences emerge between the two decision criteria, indicating that requiring referenda for open space decisions is likely to lead to inefficient outcomes. Specifically, many open space votes are likely to fail that would lead to welfare improvements, and any open space decisions that do pass will require amenities larger than needed to achieve the social optimum. The more dispersed and large the population, the larger is the gap between the socially efficient level and the level needed for a public referendum to pass.

This paper studies the equilibrium size of countries. Individuals in smallcountries have greater influence over the nature of political decision mak-ing while individuals in large countries have the advantage of more publicgoods and lower tax rates. The model implies that (i) there exists excessiveincentives to separate, though this need not be the case for all sets of seces-sion rules studied; (ii) an exogenous increase in public spending decreasescountry size; (iii) countries with a presidential-congressional democracy arelarger than countries with a parliamentary democracy.

It is widely believed that clientelism-the giving of material goods in return for electoral support-is associated with poorer development outcomes. However, systematic cross-country evidence on the deleterious effects of clientelism on development outcomes is lacking. In this paper we examine the relationship between political clientelism, public goods provision, and governance quality using cross-country panel data for 161 countries for the period 1900-2017. We distinguish between two manifestations of political clientelism-whether vote buying exists, and whether political parties offer material goods to their constituents in exchange for political support (non-programmatic party linkages). We find negative effects of political clientelism on development outcomes, with increases in clientelism leading to lower coverage of welfare programmes, increased political corruption, and weaker rule of law. We also find that the deleterious effects of political clientelism are mainly through non-programmatic party linkages rather than the practice of vote buying.