Centralization and government competition

This paper examines the relationship between government size and fiscal cent ralization with specific focus on the separate influences of centralism and fragmenta tion on the size of the public sector in the United States. The empirical findings at the national level provide support to the hypothesis that fiscal decentralization leads to a smaller government. The findings at the state and local levels, however, show no empirical relationship between government size and the degree of centralization. I. INTRODUCTION ment. Examination of only state or county government levels is typical and addresses only the 'fragmentation ' issue This paper addresses the issue of whether or not govern which measures the degree of competition between non ments act as monopolists when competitors are weak or central governments. However, there also exists the 'cent absent. At stake are issues regarding the behaviour of ralization ' issue which poses the possibility that central