We study the process by which subordinated regions of a country can obtain a more favourable political status. In our theoretical model a dominant and a dominated region first interact through a voting process that can lead to different degrees of autonomy. If this process fails then both...

Why do public-sector workers receive so much of their compensation in the form of pensions and other benefits? This paper presents a political economy model in which politicians compete for taxpayers' ’and government employees' votes by promising compensation packages, but some voters cannot...

We explore the implications for the optimal degree of fiscal decentralization when peoples preferences for goods and services, which classic treatments of fiscal federalism (Oates, 1972) place in the purview of local governments, exhibit specific egalitarianism (Tobin, 1970), or solidarity. We...

Manipulation of government finances for the benefit of narrowly defined groups is usually thought to be limited to the part of the budget over which politicians exercise discretion in the short run, such as earmarks. Analyzing a revenue-sharing program between the central and local governments...

The classic theory of fiscal federalism suggests that different people should have different governments. Yet, separate local governments with homogeneous constituents often end up doing poorly. This paper explains why and answers three questions: when regions are heterogeneous, what determines...

We consider the following allocation problem: A fixed number of public facilities must be located on a line. Society is composed of N agents, who must be allocated to one and only one of these facilities. Agents have single peaked preferences over the possible location of the facilities they are...

We correct an omission in the definition of our domain of weakly responsive preferences introduced in Klaus and Klijn (2005) or KK05 for short. The proof of the existence of stable matchings (KK05, Theorem 3.3) and a maximal domain result (KK05, Theorem 3.5) are adjusted accordingly.

Using the assignment of students to schools as our leading example, we study many-to-one two-sided matching markets without transfers. Students are endowed with cardinal preferences and schools with ordinal ones, while preferences of both sides need not be strict. Using the idea of a competitive...

In this note we show that no solution to coalition formation games can satisfy a set of axioms that we propose as reasonable. Our result points out that "solutions" to the coalition formation cannot be interpreted as predictions of what would be ìresting pointsî for a game in the way stable...