PUBLIC CHOICE IN A FEDERAL SYSTEM

Except for the mobility constraints imposed on political decisions of lower-level governments, public choice analysts assume that the workin g of the political process under federalism remains the same at all le vels of governments as under unitary state. This paper argues that one dimension of the political process in a federalist framework lends it self to specific economic analysis, namely the fact that, once constit utional limits break down and functions overlap, two or more levels of government compete for the same voters in the supply of services in a given territory. Viewing votes as inputs in the production of politic al outputs, the conventional analysis of allocation under common-prope rty rule should shed light on the outcome of this process. The analysi s shows that it is in the interest of both suppliers to seek to gain t he votes in being first to implement programs. There are thus two forc es operating in a typical federalist system, an expansionist one roote d in the political dynamics analysed here, and a restrictionist one ba sed on the mobility of resources among decentralized entities. This ma y explain why the empirical record is rather mixed on the contribution of federalism to containing government growth. The consequences of th is process are derived and possible avenues for improvement are explor ed.