Boffa, Federico; Ponzetto, Giacomo A.M.; Piolatto, Amedeo - Instituto Valenciano de Investigaciones Económicas (IVIE) - 2013
This paper studies fiscal federalism when voter information varies across regions. We develop a model of political agency with heterogeneously informed voters. Rent-seeking politicians provide public goods to win the votes of the informed. As a result, rent extraction is lower in regions with...