Panu Poutvaara, University of Helsinki, Helsinki, Finland (panu.poutvaara@helsinki.fi). Mikael Priks, Stockholm University, Stockholm, Sweden.
We would like to thank two anonymous referees of this journal, Larry Blume, Edward Glaeser, John Matsusaka, Andrei Shleifer, Jenny Säve-Söderbergh and seminar and conference participants at Tilburg University, the University of Munich, IIES and SOFI at Stockholm University, FIEF in Stockholm, the EEA Meeting in Amsterdam in 2005, the Public Choice Society Meeting in Baltimore in 2004, and the Public Economic Theory Meeting in Marseille in 2005 for helpful comments.