Distributive Politics and the Bene...ts of Decentralisation

This paper integrates the distributive politics literature with the literature on decentralization by incorporating inter-regional project externalities into a standard model of distributive policy. A key ...nding is that the degree of uniformity (or “universalism”) of the provision of regional projects is endogenous, and depends on the strength of the externality. The welfare bene...ts of decentralization, and the performance of “constitutional rules” (such as majority voting) which may be used to choose between decentralization and centralization, are then discussed in this framework. ¤I would like to thank Tim Besley, Jean Hendricks, and participants at the Public Economics Weekend at the University of Essex for helpful comments. yMailing address: Department of Economics, University of Warwick, Coventry CV4 7AL, England. Email: [email protected]