From the literature on decentralization, it appears that the fiscal vertical imbalance is somehow inherent to multi-level governments. Using a stylized model we show that this leads to a reduction in the extent of redistributive fiscal policies if the maximal tolerable size of government has...

It has been suggested that …scal federalism is a good way to induce decentralized entities to behave parsimoniously, but this has been largely criticized in the literature, in particular because of the Common-Pool problem. In this paper, we present an extra facet of the latter problem. We...

Transfers to firms and regions are made both at the level of member states (state aids) and at the level of the European Commission (Structural Funds). State aids can take different forms: direct (transfers, tax exemptions) or indirect (e.g. the definition of the reserved area in network...