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Transaction Costs and Coalition Stability under Majority Rule

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Author Info
Ronald N. Johnson
Gary D. Libecap

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Abstract

Government program allocations are more stable and more equally shared than theory predicts. Although various explanations have been offered, we emphasize the high transaction costs of political negotiations and coalition enforcement. Cycling predictions ignore the cost to politicians of repeatedly forming coalitions and neglect the opportunity costs of failed coalitions and the loss of related government programs that bring valuable constituent benefits. Because of these costs, Congress relies on coalitions larger than the minimum necessary to enact a program, adopts relatively egalitarian programmatic sharing rules, and resists efforts to change those allocations. To illustrate we analyze the Federal Highway Trust Fund. Copyright 2003, Oxford University Press.

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File URL: http://hdl.handle.net/10.1093/ei/cbg001
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Publisher Info
Article provided by Oxford University Press in its journal Economic Inquiry.

Volume (Year): 41 (2003)
Issue (Month): 2 (April)
Pages: 193-207
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Handle: RePEc:oup:ecinqu:v:41:y:2003:i:2:p:193-207

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Congleton, Roger D. & Tollison, Robert D., 1999. "The stability inducing propensities of very unstable coalitions: avoiding the downward spiral of majoritarian rent-seeking," European Journal of Political Economy, Elsevier, vol. 15(2), pages 193-205, June. [Downloadable!] (restricted)
  2. Glazer, Amihai & McMillan, Henry, 1992. " Amend the Old or Address the New: Broad-Based Legislation When Proposing Policies Is Costly," Public Choice, Springer, vol. 74(1), pages 43-58, July.
  3. McCubbins, Mathew D & Noll, Roger G & Weingast, Barry R, 1987. "Administrative Procedures as Instruments of Political Control," Journal of Law, Economics and Organization, Oxford University Press, vol. 3(2), pages 243-77, Fall.
  4. Stratmann, Thomas, 1992. "Are Contributions Rational? Untangling Strategies of Political Action Committees," Journal of Political Economy, University of Chicago Press, vol. 100(3), pages 647-64, June. [Downloadable!] (restricted)
  5. Gilligan, Thomas W & Krehbiel, Keith, 1987. "Collective Decisionmaking and Standing Committees: An Informational Rationale for Restrictive Amendment Procedures," Journal of Law, Economics and Organization, Oxford University Press, vol. 3(2), pages 287-335, Fall.
  6. Ronald N. Johnson & Gary D. Libecap, 2001. "Information distortion and competitive remedies in government transfer programs: The case of ethanol," Economics of Governance, Springer, vol. 2(2), pages 101-134, 07.
  7. Peltzman, Sam, 1985. "An Economic Interpretation of the History of Congressional Voting in the Twentieth Century," American Economic Review, American Economic Association, vol. 75(4), pages 656-75, September.
  8. Robert K. Fleck, 1999. "Electoral Incentives, Public Policy, and the New Deal Realignment," Southern Economic Journal, Southern Economic Association, vol. 65(3), pages 377-404, January.
  9. Weingast, Barry R & Shepsle, Kenneth A & Johnsen, Christopher, 1981. "The Political Economy of Benefits and Costs: A Neoclassical Approach to Distributive Politics," Journal of Political Economy, University of Chicago Press, vol. 89(4), pages 642-64, August. [Downloadable!] (restricted)
  10. Gilligan, Thomas W. & Krehbiel, Keith., 1987. "Collective Decision-Making and Standing Committees: An Informational Rational for Restrictive Amendment Procedures," Working Papers 632, California Institute of Technology, Division of the Humanities and Social Sciences. [Downloadable!]
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  1. Maze, Armelle, 2006. "Multilateral reputation mechanisms and contract law in agriculture : complement or substitutes," 2006 Annual meeting, July 23-26, Long Beach, CA 21285, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
  2. John Joseph Wallis & Barry R. Weingast, 2005. "Equilibrium Impotence: Why the States and Not the American National Government Financed Economic Development in the Antebellum Era," NBER Working Papers 11397, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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