Designing Federalism

Because of the redistributive nature of institutions and the availability of implementable alternatives with different distributive consequences, the desire of federation members to change institutional specifics in their favor is a permanent feature of the federal political process. This is so for two reasons. First, states or their equivalents in democratic federations usually can succeed in renegotiating the rules if they feel sufficiently motivated to do so. Second, in the case of a federation it is more or less clear who stands to benefit from any change in institutions. Thus, the existence of an equilibrium of constitutional legitimacy at the popular and elite levels cannot be taken for granted. The authors show that the presence in the political process of agents who are ‘naturally committed’ to the status-quo institutional arrangement can suffice to coordinate voters to act as if they support existing constitutional arrangements.