Scandinavian Working Papers in Economics

Umeå Economic Studies,
Umeå University, Department of Economics

No 850: Public Goods in a Voluntary Federal Union: Implications of a Participation Constraint

Thomas Aronsson (), Luca Micheletto () and Tomas Sjögren ()
Additional contact information
Thomas Aronsson: Department of Economics, Umeå School of Business and Economics, Postal: Umeå University, S 901 87 Umeå, Sweden
Luca Micheletto: Department of Policy Analysis and Public Management, Postal: Bocconi University, 20136 Milan, Italy
Tomas Sjögren: Department of Economics, Umeå School of Business and Economics, Postal: Umeå University, S 901 87 Umeå, Sweden

Abstract: This paper re-examines the question of whether federal ex-post redistribution in terms of public funds leads to under-provision of public goods by adding the assumption that the member states are free to leave the economic federation. We show that federal ex-post redistribution no longer necessarily means under-provision of local and federal public goods.

Keywords: Public goods; fiscal federalism; ex-post redistribution

JEL-codes: D61; H41; H77

7 pages, October 18, 2012

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