In this paper we consider a model of the country with heterogeneous population and examine compensation schemes that may prevent a threat of secession by dissatisfied regions. We show that horizontal imbalances are combatable with secession-proof compensation schemes that entail a degree of...

In this paper we examine economic disparities across regions in Russia and offer a theoretical treatment of various transfer rules between different regions. We analyze the principle of partial equalization, which implies that the more depressed regions should be subsidized by the more...