Intergovernmental Grants: A Formal Model of Interrelated National and Subnational Political Decisions.

Intergovernmental grants are based on the interrelated choices of: (i) the national government deciding whether to offer the grant; (ii) the national government determining grant conditions; (iii) the subnational government deciding whether to accept the grant; and (iv) the subnational government determining policy, including spending levels, upon grant receipt. Empirically and theoretically, scholars often study these decisions separately, leading to an incomplete understanding of grant-related behavior. This article develops a noncooperative game theoretic model that simultaneously captures all four of these decisions. This approach helps to better explain puzzles surrounding intergovernmental grants, including the 'flypaper effect,' asymmetric responses of recipient governments to grant increases and decreases, the grant-acceptance decisions of subnational governments, and tradeoffs between the size of grants and the strings that are attached. [ABSTRACT FROM AUTHOR]

Copyright of Publius: The Journal of Federalism is the property of Oxford University Press / USA and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)