Divide the dollar, a model of interregional redistributive politics

Abstract

We develop a dynamic political model of dividing a fixed amount of money among n districts. There are two political parties that make proposal on such divisions and compete in each district. Each district elects a representative to a legislature. Each party is governed by its representatives who are elected to the legislature. Voters are myopic and there is a slight incumbency advantage. We show that if all districts are of the same size then they all get the same share in the long run.