HEC Research Papers Series,
HEC Paris

Abstract: Federalism notoriously struggles with the allocation of competences between the federal and sub-federal levels. Legal doctrines vary across jurisdictions in how they allocate authority. From an efficiency perspective, the allocation is determined through a "federalism test" comparing the efficiency of each level of government. This comparison is difficult because which allocation will be more efficient in the future is uncertain and potentially endogenous to the current allocation. We formally define efficiency in such a context, show that a "static" federalism test that neglects endogeneity can fail to implement the efficient allocation, and propose a "dynamic" test to address the issue. We discuss the relevance of our results in light of jurisprudence in different policy areas.

Keywords: Federalism; Subsidiarity; Centralization; Decentralization

JEL-codes: D72; F55; H77; K19; K33

35 pages, November 7, 2025

Full text files

papers.cfm?abstract_id=5717305 HTML file Full text

Download statistics

• HEC Paris
• Ordering Working Papers
• Home page for this series

Questions (including download problems) about the papers in this series should be directed to Antoine Haldemann ()
Report other problems with accessing this service to Sune Karlsson ().

RePEc:ebg:heccah:1587This page generated on 2025-11-27 11:16:08.