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Vladimir Ponczek, Enlinson Mattos and Paulo Arvate
''Municipalities Secession and uncertainty on public goods provision''
( 2015, Vol. 35 No.1 )
This paper investigates the causes of municipalities secession in Brazil. We develop a model where the median voter decides on the creation of new municipalities observing the trade-off between loss of scale on public production and increase in federal transfers to his/her municipality. Voters acquire more information from the decision undertaken by neighbor's municipalities within the state. We test the adherence of our model using Brazilian data of municipalities creation occurred in the 90's. Our results show that, on average, for each 10 municipalities seceded within a State in the previous period between 6 and 10 new ones are created in the next period.
Keywords: Municipalities secession, median voter, public good provision.
JEL: H4 - Publicly Provided Goods: General
H2 - Taxation, Subsidies, and Revenue: General
Manuscript Received : Aug 26 2014 Manuscript Accepted : Mar 11 2015

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