The Social Discount Rate under Majority Voting
AbstractIf each voter is a price taker who consumes a bundle of goods such that his marginal rate of substitution equals the relative prices of goods in different periods, all consumers will have the same marginal rate of time preference. This seems to suggest that voters will unanimously agree on the social discount rate. Such reasoning ignores, however, the effects of different investment policies on the relative prices of goods in different periods. A consideration of this effect shows that a majority of voters may prefer a social discount rate that allows the adoption of inefficient investments.
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Bibliographic InfoArticle provided by in its journal Public Finance = Finances publiques.
Volume (Year): 44 (1989)
Issue (Month): 3 ()
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- Amihai Glazer & Vesa Kanniainen & Esko Niskanen, 2001.
"Bequests, Control Rights, and Cost-Benefit Analysis,"
CESifo Working Paper Series
576, CESifo Group Munich.
- Glazer, Amihai & Kanniainen, Vesa & Niskanen, Esko, 2003. "Bequests, control rights, and cost-benefit analysis," European Journal of Political Economy, Elsevier, vol. 19(1), pages 71-82, March.
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