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Centralization and accountability: theory and evidence from the Clean Air Act

Author

Listed:
  • Federico Boffa

    (Università di Macerata & IEB)

  • Amedeo Piolatto

    (Universitat de Barcelona & IEB)

  • Giacomo A. M. Ponzetto

    (CREI, Universitat Pompeu Fabra & Barcelona GSE)

Abstract
This paper studies fiscal federalism when voter information varies across regions. We develop a model of political agency with heterogeneously informed voters. Rent-seeking politicians provide public goods to win the votes of the informed. As a result, rent extraction is lower in regions with higher information. In equilibrium, electoral discipline has decreasing returns. Thus, political centralization efficiently reduces aggregate rent extraction. The model predicts that a region’s benefits from centralization are decreasing in its residents’ information. We test this prediction using panel data on pollutant emissions across U.S. states. The 1970 Clean Air Act centralized environmental policy at the federal level. In line with our theory, we find that centralization induced a differential decrease in pollution for uninformed relative to informed states.

Suggested Citation

  • Federico Boffa & Amedeo Piolatto & Giacomo A. M. Ponzetto, 2012. "Centralization and accountability: theory and evidence from the Clean Air Act," Working Papers 2012/14, Institut d'Economia de Barcelona (IEB).
    • Handle: RePEc:ieb:wpaper:doc2012-14
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    More about this item

    Keywords

    Political centralization; government accountability; imperfect information; elections; environmental policy; air pollution;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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