Employing a political-economics approach, this paper compares small states and unions when the former fail to internalize cross-border externalities of publicly provided goods. It discusses two types of unions: federations with more than one level of government and unitary states. While unitary...

Some societies appear to be better equipped than others to implement efficiency enhancing policy reforms and to deliver positive results out of their implementation. Our model presents an under-examined element of policy reform and institutional quality, showing how the characteristics of the...