Foundational Bargains: Distributive Conflicts and Representation in Federations.

The literature on endogenous institutions highlights inequality as a key factor driving institutional choice. The second generation fiscal federalism literature emphasizes representation and party systems in accounting for varied outcomes across federations but mostly treats these factors as exogenous. Yet party systems and institutions of representation in federations are endogenous. Here we present the first analysis of the institutional bargains over political representation at the founding moment of federations. We argue that socio-economic geography, inter-regional inequality, and the means of preference aggregation combine to shape regional preferences and the outcome of negotiations over the centralization of political authority. We test the argument using a new dataset covering 39 federations across 250 years. By endogeneizing representation, we make several contributions. First, our argument adds to emerging work on the role of geography in shaping political and economic outcomes. Second, our argument bridges the literatures on endogenous institutions and comparative federalism. Finally, we contribute the first systematic analysis of the political economy of institutional innovation in federations. ..PAT.-Unpublished Manuscript [ABSTRACT FROM AUTHOR]