Abstract

This paper addresses the issue of the effects of political and administrative decentralization on local public goods supply, when both Countries and Regions/ Provinces within the same Country have different institutional qualities. Two distinct empirical investigations are presented. The first relates to a sample of 31 advanced economies between 1980 and 2012; the second focuses on Italian provinces in years 2001 and 2009. The results are consistent with the idea that benefits should not be given as granted, as they considerably vary according to local institutional quality. In detail, we find that for countries and regions with unfavorable institutional conditions (i.e. high corruption, poor independence of mass media, low quality of politicians and low voters' awareness), a perverse impact of decentralization on public goods supply, and ultimately on social welfare, may take place, leading to a decrease of their quality/quantity.