Abstract
The vertical structure of government in all OECD countries is characterized by a hierarchy of two or three layers of governments, with the national government at the top and local government at the bottom. Typically, unitary states like Sweden have two layers, while federal states like Germany have three layers of more. This structure serves as a basis for assigning specific tasks to local governments, which, due to their closer proximity to the citizen and their better knowledge of local economic conditions, they can fulfil better than the central government.1 Decentralization of the public sector also serves to create competition for taxpayers among local governments. Such competition is regarded as a check on rent-seeking behavior of selfish politicians and on excessive growth of government.2
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von Hagen, J., Dahlberg, M. (2004). Swedish Local Government: Is There a Bailout Problem?. In: Molander, P. (eds) Fiscal Federalism in Unitary States. ZEI Studies in European Economics and Law, vol 6. Springer, Boston, MA. https://doi.org/10.1007/978-1-4615-0503-7_3
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DOI: https://doi.org/10.1007/978-1-4615-0503-7_3
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