Centralization and Accountability: Theory and Evidence from the Clean Air Act

CentER Discussion Paper Series No. 2012-033

50 Pages Posted: 18 Apr 2012

See all articles by Federico Boffa

Federico Boffa

Università degli Studi di Macerata

Amedeo Piolatto

Autonomous University of Barcelona; Barcelona Economics Institute (IEB); Barcelona Graduate School of Economics (Barcelona GSE)

Giacomo A. M. Ponzetto

CREI - Universitat Pompeu Fabra

Multiple version iconThere are 2 versions of this paper

Date Written: April 16, 2012

Abstract

This paper studies fiscal federalism when voter information varies across regions. We develop a model of political agency with heterogeneously informed voters. Rentseeking 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 e¢ ciently 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

Boffa, Federico and Piolatto, Amedeo and Ponzetto, Giacomo A. M., Centralization and Accountability: Theory and Evidence from the Clean Air Act (April 16, 2012). CentER Discussion Paper Series No. 2012-033, Available at SSRN: https://ssrn.com/abstract=2040692 or http://dx.doi.org/10.2139/ssrn.2040692

Federico Boffa (Contact Author)

Università degli Studi di Macerata ( email )

Via Angeloni 3
Jesi, Ancona 60035
Italy
+393358218861 (Phone)

Amedeo Piolatto

Autonomous University of Barcelona ( email )

Department of Economics and Economic History
Edifici B - Campus Bellaterra
Barcelona, 08193
Spain

HOME PAGE: http://https://sites.google.com/site/piolatto/

Barcelona Economics Institute (IEB) ( email )

c/ John M. Keynes, 1-11
Barcelona, 08034
Spain

HOME PAGE: http://https://sites.google.com/site/piolatto/

Barcelona Graduate School of Economics (Barcelona GSE) ( email )

Ramon Trias Fargas, 25-27
Barcelona, Barcelona 08005
Spain

Giacomo A. M. Ponzetto

CREI - Universitat Pompeu Fabra ( email )

Ramon Trias Fargas, 25-27
Barcelona, 08005
Spain
+34 93 542 2829 (Phone)
+34 93 542 2826 (Fax)

HOME PAGE: http://www.crei.cat/people/ponzetto

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