This paper is to propose an incentive system to make government budget more efficient. It is usually said that bureaucratic behavior and incomplete transmission of voters' preferences to policy makers bring about status quo bias and incremental budget formation which lead to excessive government spendings. The incentive system proposed here can resolve both problems. The system is workable when a government has multi-sectoral bureaucratic organization and each sector's budget share has a crucial meaning for bureaucrats. Under these conditions there can be an incentive compatible equilibrium of direct negotiation among the bureaucratic sectors on budget allocation to each sector, which is less expensive and preferable for voters.

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The purpose of this paper is to explore the characters of Japanese intergovernmental subsidization.
First of all, we must take into account the centralized fiscal institution, Japanese fiscal property. Japanese government have very much concerned about the equality of the standard-of-living among the local districts so far. The centralized fiscal institution have been approprite for this intention. Indeed, this policy have been allowed by the nation and successfully developed the country. While, however, many fiscal problems come up recently. I think the disease germ of the most serious symptom is that this centralized mechanism makes the local governments and people rely madly upon the subsidization from the central. Then, because the benefit (from public goods) differs from the cost (of public investment), nobody does not need to consider the finance, even which is finally covered by their burden. Local politicians monotonously attempt to obtain the subsidy, which activity is a typical rent-seeking. I recognized that it is a situation, prisoner's dilemma. Even these problems occur, we don't know them very much. Thus this paper shed light on.
One of the most interesting results which are estimated by OLS is that Japanese Intergovernmental subsidy is not consistent with a general supposition, a state of municipal funds should reflects a state of his representative household account. I think this supposition have been established since Musgrave (1959) . Previous studies had no doubt whether or not, it was satisfied, as long as I know.
Our statistical results significantly states that intergovermental subsidization is redistributed for compensating for the lack of municipal funds rather than for allocating to the poor. Not only this suggestion but also other results do urge us to reexamine the real facts of intergovernmental redistribution.

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