This paper aims at presenting a simple model of local decision-making based on the hypothesis of monopoly power on the part of local governments. It adds the contribution of the principal-agent theory by assuming that: (a) monopolistic behavior is constrained by voters' efforts to monitor the...

This paper aims at presenting a simple model of local decision-making based on the hypothesis of monopoly power on the part of local governments. It adds the contribution of the principal-agent theory by assuming that: (a) monopolistic behavior is constrained by voters’ efforts to monitor...