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Bargaining, Coalitions and Local Expenditure

Faculty of Economics, Europa- Universität Viadrina, Frankfurt (Oder), Germany, gangopad{at}euv-frankfurt-o.de

Shyam Nath

Department of Economics and Statistics, University of Mauritius, Reduit, Mauritius, snath{at}uom.ac.mu

We extend the literature on local expenditure determination by showing that bargaining and grand coalition seem to facilitate collective decision-making in an assembly of elected councillors. We demonstrate that the solution of the game turns on the principle of equal relative concession. Based on limited experimentation, we assess the performance of local governments and find that group dominance frustrates local expenditure efficiency in urban localities of India.

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