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Fiscal federalism and lobbying
Authors:Massimo Bordignon  Umberto Galmarini
Affiliation:a Istituto di Economia e Finanza, Università Cattolica, Largo Gemelli 1, 20123 Milano, Italy
b Dipartimento di Diritto ed Economia, Università dell'Insubria, Viale Cavallotti 5, 22100 Como, Italy
Abstract:Which government functions should be decentralized (resp. centralized) once lobbying behavior is taken into account? We find that the answer largely depends on how the interests of the regional lobbies are positioned with respect to the function to be decentralized (resp. centralized). When regional lobbies have conflicting interests, then lobbying is less damaging for social welfare under centralization than under decentralization. On the contrary, when regional lobbies have aligned interests, then lobbying is less damaging for social welfare under decentralization, provided that policy spillovers on the non-organized groups are not too strong.
Keywords:D70   H23   H77
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