Piling On: Multilevel Government and the Fiscal Common-Pool

Authors


  • I am grateful to the following individuals, who provided valuable comments on this project: Brandice Canes-Wrone, Sven Feldmann, Jacob Gersen, Sanford Gordon, Mark Hansen, William Howell, John Matsusaka, Mathew McCubbins, Jeff Milyo, Michael Munger, Sam Peltzman, Paul Peterson, Richard Posner, Marcos Rangel, Francesco Trebbi, Martin West, and anonymous reviewers. All remaining mistakes are my own—although with so many smart people having read the article, someone really should have caught them.

Christopher Berry is assistant professor of political science, Harris School of Public Policy, The University of Chicago, 1155 E. 60th Street, Chicago, IL 60637 (crberry@uchicago.edu).

Abstract

This article discusses the common-pool problems that arise when multiple territorially overlapping governments share the authority to provide services and levy taxes in a common geographic area. Contrary to the traditional Tiebout model in which increasing the number of competing governments improves efficiency, I argue that increasing the number of overlapping governments results in “overfishing” from the shared tax base. I test the model empirically using data from U.S. counties and find a strong positive relationship between the number of overlapping jurisdictions and the size of the local public sector. Substantively, the “overlap effect” amounts to roughly 10% of local revenue.

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