The Role of Direct Democracy in Fostering Competition between Local Governments
That many Swiss municipalities deal sensibly with their tax revenues is not, strictly speaking, due to competition between local governments: competition is attenuated by Switzerland’s three tier system of government and by cantonal financial transfer mechanisms that can, in extremis, eliminate entirely all incentives for sound local management. Rather, the driver for good housekeeping is direct democracy.
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Lukas Rühli
