Bulletin n. 2/2011
October 2011
CONTENTS
  • Section A) The theory and practise of the federal states and multi-level systems of government
  • Section B) Global governance and international organizations
  • Section C) Regional integration processes
  • Section D) Federalism as a political idea
    • Roger D. Congleton
    Why local governments do not maximize profits: on the value added by the representative institutions of town and city governance
    in Public Choice , Volume 149, Numbers 1-2 ,  2011 ,  187-207
    This paper provides an explanation for the lack of profit-maximizing local governments and for the historically widespread use of more or less representative forms of town and city governance. The analytical part of the paper suggests that profit-maximizing governments suffer from a “proprietor’s dilemma,” which can be reduced by including a representative council with veto power over new taxes. Limited but costly mobility plays a role in the analysis, as does the fact that residents often make investments in a town that are difficult to relocate once made.
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