This paper investigates the link between local budget outcomes and the intensity of party competition, measured as the margin of victory obtained by the incumbent in the previous local election (i.e. the difference between the vote share and 50%). Two competing hypotheses are tested in the paper. On the one hand, the Leviathan government hypothesis suggests that the lower the intensity of party competition is, the greater is the increase in the size of the local public sector, irrespective of the ideology of the party in power. On the other hand, the Partisan government hypothesis suggests that the incumbent will find it easier to advance its platform when intensity of competition is low (i.e., parties on the left/right will increase/decrease the size of the local public sector when the intensity of the challenge from the opposition is low). These hypotheses are tested with information on spending, own revenues and deficit for more than 500 Spanish local governments over 8 years (1992-1999), and information on the results of two local electoral contests (1991 and 1995). The evidence favors the Partisan hypothesis over the Leviathan one.

This paper estimates the degree of economies of scope, diversification and scale in the Spanish electricity industry by means of Data Envelopment Analysis. Our results show that there exist economies of integrating power generation and distribution, as well as economies of product diversification at the generation stage. Particularly, the hypothetical vertical unbundling and the generating product specialization of the existing diversified firms would raise the total operating costs of the Spanish electricity sector by 4.7 and 3.5 percent respectively. Additionally, size appears to be irrelevant provided that vertical scope and product-mix are preserved. Further, it is estimated that overall operating costs of the sector could be reduced by 2.7% by partitioning each of the diversified firms down the middle. In addition to improving firms’ scale efficiency, such fragmentation would help to create a more competitive market structure.

This paper quantifies the welfare effects of the Spanish public investment in infrastructures. For that purpose, we use data on Spanish economy to calibrate a dynamic general equilibrium model with a representative agent, where public investment is financed by means of distortionary taxes. As is usual, the stock of public infrastructures has a positive effect on the total factor productivity. However, as main contribution of the paper, we assume that this effect depends on the effective endowment of infrastructures. In particular, we assume that thereare diminishing returns to scale at the private level as a consequence of the existence of transport costs, which negatively depend on the stock of infrastructures per unit of output.

Why so many people pay their taxes, although fines and audit probability are low, has become a central question in the tax compliance literature. Concepts of Homo Economicus, endowed with a more refined motivation structure, help to shed light on the tax compliance puzzle. This paper provides empirical evidence for the relevance of conditional cooperation, using survey data from 30 European countries. The findings suggest that a higher perceived tax evasion leads to a lower tax morale, also when controlling for additional factors in a multivariate analysis.

When a major technological innovation spreads out in both high-tech and middle/low-tech industries, new clusters appear, develop and grow at the expenses of “older” historical industrial sites. The literature has, under various labels, recognised three main stages of cluster development: an initial stage sparked by an initial exogenous, shock; a second stage driven by Marshall’s (1920) agglomeration economies (labour market pooling, supply of intermediate goods and services and knowledge spillovers); a third stage in which the cluster either achieves a sectoral leadership or declines. The paper shows how different clusters’ evolution (often told as separated stories) are part of a wider picture in which technological and spatial interactions between emerging and declining clusters play a decisive role. A final section draws some policy suggestions for public authorities and regional planners dealing with the development of an innovative cluster.

We test the ‘yardstick competition’ hypothesis by looking at the effects of property tax increases both in the locality and in other comparable jurisdictions on the incumbents’ vote. In order to obtain unbiased estimates of the effects of taxes on voting, we account for national political shocks, ideological preferences of the citizenship and government traits, and we estimate the vote equation using instrumental variables. We also allow various traits of the government (ideology, coalition government, and first term government) to mediate the effects of taxes on voting. The vote equation was estimated using a large database containing nearly 3,000 Spanish municipalities and analysing three local elections (1995, 1999 and 2003). The results suggest that property tax increases, both at municipality and neighbourhood level, have a non-negligible impact on incumbent votes, and that this impact is especially high when: the government is right-wing, is a coalition, and is not in its first term.