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Inefficient redistribution and inefficient redistributive politics

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  • Dan Kovenock

    ()

  • Brian Roberson

    ()

Abstract

This paper examines the effect of inefficient redistribution in Myerson’s (1993) model of redistributive politics. Regardless of the absolute levels of the efficiency of political parties’ transfers to different voter segments, parties have incentive to (stochastically) shift resources away from voter segments with large relative efficiency gaps between the two parties’ transfers towards voter segments with smaller relative efficiency gaps. Because of this dependence on relative, and not absolute, levels of efficiency, the parties’ optimal strategies may lead to large discrepancies between the sum of the budgetary transfers and the sum of the effective transfers. At the extreme, in the spirit of Magee, Brock, and Young (1989), we obtain “black hole” inefficiency. When the model is extended to allow for loyal voter segments and loyalty to a party is positively related to the efficiency of that party’s transfers to the segment, the incentives leading to black hole inefficiency become even stronger.

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Bibliographic Info

Article provided by Springer in its journal Public Choice.

Volume (Year): 139 (2009)
Issue (Month): 3 (June)
Pages: 263-272

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Handle: RePEc:kap:pubcho:v:139:y:2009:i:3:p:263-272

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Web page: http://www.springerlink.com/link.asp?id=100332

Related research

Keywords: Redistributive politics; Inefficient redistribution; Black-hole inefficiency; Party loyalty; Colonel Blotto game;

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References

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  1. Konrad, Kai A, 2001. "Investment in the Absence of Property Rights: The Role of Incumbency Advantages," CEPR Discussion Papers 3050, C.E.P.R. Discussion Papers.
  2. Dan Kovenock & Brian Roberson, 2008. "Electoral Poaching and Party Identification," Journal of Theoretical Politics, , vol. 20(3), pages 275-302, July.
  3. Baye, M.R. & Kovenock, D. & De Vries, C., 1992. "The All-Pay Auction with Complete Information," Papers 8-92-1, Pennsylvania State - Department of Economics.
  4. Nicolas Sahuguet & Nicola Persico, 2006. "Campaign spending regulation in a model of redistributive politics," Economic Theory, Springer, vol. 28(1), pages 95-124, 05.
  5. Arye L. Hillman & John G. Riley, 1987. "Politically Contestable Rents and Transfers," UCLA Economics Working Papers 452, UCLA Department of Economics.
  6. Brian Roberson, 2006. "The Colonel Blotto game," Economic Theory, Springer, vol. 29(1), pages 1-24, September.
  7. Becker, Gary S, 1983. "A Theory of Competition among Pressure Groups for Political Influence," The Quarterly Journal of Economics, MIT Press, vol. 98(3), pages 371-400, August.
  8. Lien, Da-Hsiang Donald, 1990. "Corruption and allocation efficiency," Journal of Development Economics, Elsevier, vol. 33(1), pages 153-164, July.
  9. Acemoglu, Daron & Robinson, James A, 1999. "Inefficient Redistribution," CEPR Discussion Papers 2122, C.E.P.R. Discussion Papers.
  10. Clark, Derek J. & Riis, Christian, 2000. "Allocation efficiency in a competitive bribery game," Journal of Economic Behavior & Organization, Elsevier, vol. 42(1), pages 109-124, May.
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Citations

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Cited by:
  1. Subhasish M. Chowdhury & Dan Kovenock J. & Roman M. Sheremeta, 2009. "An Experimental Investigation of Colonel Blotto Games," CESifo Working Paper Series 2688, CESifo Group Munich.
  2. Marcin Dziubiński, 2013. "Non-symmetric discrete General Lotto games," International Journal of Game Theory, Springer, vol. 42(4), pages 801-833, November.
  3. Kovenock, Dan & Roberson, Brian, 2009. "Non-partisan 'Get-out-the-vote' efforts and policy outcomes," Discussion Papers, Research Unit: Market Processes and Governance SP II 2009-07, Social Science Research Center Berlin (WZB).
  4. Stefan Homburg, 2011. "Colonel Blotto und seine ökonomischen Anwendungen," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 12(1), pages 1-11, 02.

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