Template-type: ReDIF-Paper 1.0 Author-Name: Raul A. Ponce-Rodriguez Author-Email: rponce@uacj.mx Author-Homepage: https://sites.google.com/site/raulponcerodriguez/Raul-Ponce Author-Workplace-Name: Department of Economics, Universidad Autonoma de Ciudad Juarez Author-Name: Charles R. Hankla Author-Email:chankla@gsu.edu Author-Workplace-Name: Department of Political Science, Georgia State University Author-Workplace-Homepage: http://shared.cas.gsu.edu/profile/charles-hankla-2/ Author-Name: Jorge Martinez-Vazquez Author-Email: jorgemartinez@gsu.edu Author-Homepage: https://icepp.gsu.edu/profile/jorge-martinez-vazquez/ Author-Workplace-Name: International Center for Public Policy. Andrew Young School of Policy Studies, Georgia State University Author-Workplace-Homepage: https://icepp.gsu.edu/ Author-Name: Eunice Heredia-Ortiz Author-Email: eunice_heredia-ortinz@dai.com Author-Homepage:https://ideas.repec.org/f/phe230.html Author-Workplace-Name:Developemtn Alternatives Inc., DAI Author-Workplace-Homepage:http://dai.com/who-we-are/our-team/eunice-heredia-ortiz Title: Political Institutions and Federalism: A "Strong" Decentralization Theorem Abstract: In this article, we investigate how differences in the political institutions necessary for implementing decentralization reform may affect the efficiency and welfare properties of decentralization itself. We incorporate insights from political science and economics into a rigorous and formal extension of the influential “decentralization theorem” first developed by Oates in 1972. In our analysis, we go beyond Oates by producing a strong decentralization theorem that identifies the political conditions under which democratic decentralization dominates centralization even in the presence of interjurisdictional spillovers. More specifically, we find that beneficial outcomes for public service delivery will obtain when democratic decentralization (i.e. the creation of popularly elected sub-national governments) is combined with party centralization (i.e. the power of national party leaders to nominate candidates for sub-national office). We also find that the participation rules of primaries, whether closed or open, have important implications for the expected gains from decentralization. Most notably, we find that, when primaries are closed, even Oates’ convhaentional decentralization theorem does not hold. In summary, our theory shows that political institutions matter considerably in determining the welfare gains of decentralization outcomes. Length: 39 pages Creation-Date: 2016-03 File-URL: http://icepp.gsu.edu/files/2016/03/Working-Paper-16-03.pdf File-Format:application/pdf Handle: RePEc:ays:ispwps:paper1603