Veto institutions are often dominated by government opponents with rival electoral and policy interests (e.g. \divided government"). I investigate the tradeoff between policy control and policy blockade when both the government and the veto party may cater to opposing special interests. The value of an opposition veto depends on whether electoral accountability can discipline bad type politicians. When this is not the case, a veto is beneficial only if the government's special interests are expected to be harmful. In contrast, when bad types care about (re-)election, a veto always increases expected welfare, providing a new rationale for the frequent occurrence of "divided government". Without policy rivalry, an opposition veto fares even better.
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Paper provided by University of Bonn, Germany in its series Bonn Econ Discussion Papers with number
bgse10_2004.
Length: 42 Date of creation: Jun 2004 Date of revision: Handle: RePEc:bon:bonedp:bgse10_2004
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Find related papers by JEL classification: A12 - General Economics and Teaching - - General Economics - - - Relation of Economics to Other Disciplines D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy-Making and Implementation H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
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.:
Ernesto Dal Bo & Rafael Di Tella, 2003.
"Capture by Threat,"
Journal of Political Economy,
University of Chicago Press, vol. 111(5), pages 1123-1152, October.
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