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Intergovernmental Political Competition in American Federalism

Authors


  • Thanks to Jenna Bednar, Cliff Carrubba, Sven Feldmann, Darren Filson, Jonathan Klick, Tom Palfrey, Ken Shotts, Alan Wiseman, editors, anonymous referees, and participants in the SCAMP program, the Boston College/AEI Federalism Workshop, and the Public Choice Society meetings for helpful comments and suggestions. The author wishes to acknowledge the financial support of the John Randolph Haynes and Dora Haynes Foundation and the Robert Wood Johnson Foundation.

Craig Volden is assistant professor of political science, The Ohio State University, 2140 Derby Hall, 154 North Oval Mall, Columbus, OH 43210-1373 (volden.2@osu.edu).

Abstract

Many policies in the United States are jointly determined by federal and state actions. In the game theoretic model offered here, politicians in both the state and national governments seek credit for providing goods desired by the public and avoid blame for the taxes necessary to provide the goods. In line with Peterson's (1995) theory of functional federalism, the level of government that is better able to supply particular goods and services tends to take the lead in their provision, even to the extent of fully crowding out much less efficient governments. However, under a broad set of circumstances, both state and national politicians seek credit via public spending, and their joint provision leads to a relative “oversupply” of public goods and services, and thus to “overtaxation.” Under joint provision, states vary in their responses to changing federal spending patterns based both on the causes of the national changes and on state characteristics.

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