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Title: Government and Cities: Contests and the Decentralization of Decision Making

Author(s): Gil S Epstein and Ira Gang

Publication Date: October 2002

Keyword(s): contests, economic models of political processes, fiscal federalism, intergovernmental relations and interjurisdictional differentials and their effects

Programme Area(s): Public Economics

Abstract: Governments do not have perfect information regarding the priorities and the needs of different groups in the economy. This lack of knowledge opens the door for different groups to lobby the government in order to receive the government?s support. We set up a model of hierarchical contests and compare the implications of a centralized allocation process with a decentralized allocation process. We show the potential existence of a poverty trap as a result of fiscal federalism.

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Bibliographic Reference

Epstein, G and Gang, I. 2002. 'Government and Cities: Contests and the Decentralization of Decision Making'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=3585