We ask whether inter-municipal cooperation serve as a platform by which municipalities coor-dinate tax policies and reduce the intensity of tax competition. In this paper, we focus on inter-municipal cooperation in form of inter-local industrial parks. We apply the generalized syn-thetic control...

This paper analyses the impact of vertical grants on local public sector efficiency. First, we develop a theoretical model in which the bureaucrat sets the tax price while voters choose the quantity of public services. In this model, grants reduce efficiency if voters do not misinterpret the...

Performance budgeting schemes in the public sector have to operate with imperfect performance measures. We argue that these imperfections lead to wasteful fund-seeking (window dressing and lobbying) by the administrative units that produce public services. We develop a game-theoretical model to...

We analyze the impact of large firms on business tax rates using data from German mu-nicipalities in Hesse in 1998-2005. Results suggest that business tax rates decrease with tax-payers' concentration, indicating strong local lobbying power of large firms.

We investigate the motives of pro-social behavior in collective decisions in an economic experiment. It compares individual behavior in private and collective decisions in a unified experimental setup. Subjects are given an individual endowment and have to decide how much of it to donate to...

Performance budgeting schemes in the public sector have to operate with imperfect performance measures. We argue that these imperfections generate incentives for the potential recipients of performance-based funds to use up resources in socially wasteful influence activities. We develop a...

Which motives drive the decision of a voter to approve or reject a policy proposal? The Public Choice literature distinguishes between instrumental and expressive voting motives. We investigate the importance of these motives by analysing the patterns of neural activity in different voting...

This paper provides a theoretical model of electoral competition in a multidimensional political arena with a heterogenous electorate and politically active interest groups. The emerging pattern of movement in policy platforms is fundamentally different to the concept of convergence proposed by...

This paper provides a theoretical model of party competition in a heterogeneous electorate. The latter consists of numerous groups of dominant-issue-voters who base their voting decision primarily on one issue of the political agenda. Parties follow a lexicographic objective function, aiming to...