David Granlund: The Swedish Retail Institute (HUI), Postal: Regeringsgatan 60, 103 29 Stockholm, Sweden, and Umeå University, Department of Economics, SE-901 87, Umeå, Sweden,
Abstract: In democracies, elections are the primary mechanism for making politicians act in voters’ interests, but voters are unable to prevent that some resources are diverted to political rents. With two levels of government, the rents are reduced if voters require higher beneficial public expenditures for reelecting incumbents. Voters can also strengthen their power by holding politicians liable also for decisions made by the other level of government. When the incumbent at one level acts as a Stackelberg leader with respect to the other, there is no risk of this leading to Leviathan policies on the part of the incumbents.
32 pages, January 1, 2010
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