AbstractWe introduce democratic mechanisms as a set of rules that must obey liberal democracy's fundamental principles of equal voting and agenda rights. We show that an appropriate combination of three rules may yield efficient provision of public projects: first, flexible and double majority rules, where the size of the majority depends on the proposal, and taxed and non-taxed individuals need to support the proposal; second, flexible agenda costs, where the agenda-setter has to pay a certain amount of money if his proposal does not generate enough supporting votes; third, a ban on subsidies. We highlight that universal equal treatment with regard to taxation is undesirable. Finally, we illustrate how simple constitutions involving fixed super majority rules yield socially desirable outcomes if the agenda-setter is benevolent. (JEL: D62, D72, H40) (c) 2009 by the European Economic Association.
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Bibliographic InfoArticle provided by MIT Press in its journal Journal of the European Economic Association.
Volume (Year): 7 (2009)
Issue (Month): 6 (December)
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Find related papers by JEL classification:
- D62 - Microeconomics - - Welfare Economics - - - Externalities
- D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
- H40 - Public Economics - - Publicly Provided Goods - - - General
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- Aidt, T.S. & Giovannoni,F., 2005.
"Critical Decisions and Constitutional Rules,"
Cambridge Working Papers in Economics
0523, Faculty of Economics, University of Cambridge.
- Sahm, Marco, 2006. "Essays in Public Economic Theory," Munich Dissertations in Economics 5633, University of Munich, Department of Economics.
- Hans Gersbach, 2011. "On the limits of democracy," Social Choice and Welfare, Springer, vol. 37(2), pages 201-217, July.
- Gersbach, Hans & Hahn, Volker & Imhof, Stephan, 2010.
CEPR Discussion Papers
7831, C.E.P.R. Discussion Papers.
- Hans Gersbach, 2010. "Democratic Provision of Divisible Public Goods," CESifo Working Paper Series 2939, CESifo Group Munich.
- Hans Gersbach & Oriol Tejada, 2012. "Channeling the final Say in Politics," CER-ETH Economics working paper series 12/164, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
- Johannes Gerd Becker, 2011. "On the Number of alpha-Pivotal Players," CER-ETH Economics working paper series 11/142, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
- Becker, Johannes Gerd & Gersbach, Hans & Grimm, Oliver, 2010. "Debt-sensitive Majority Rules," CEPR Discussion Papers 7860, C.E.P.R. Discussion Papers.
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