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Anarchy, Efficiency, and Redistribution

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  • Dieter Bös
  • Martin Kolmar

Abstract

The purpose of this paper is twofold. We first develop a contractarian theory of redistribution. The existence of rules of redistribution is explained without any recourse to the risk-aversion of individuals. Hence, we depart from the standard legitimization of redistribution as fundamental insurance and interpret it as stemming from a principle of reciprocity in trade. The second purpose of the paper is to develop a theory of institutions that implement optimal allocations. We depart from the assumption of an exogenous enforcement of constitutional rules. Hence, the self-enforcement of constitutional rules is crucial for the implementability of allocations. This approach implies that there is no allocative difference between constitutional and ordinary rules. What makes constitutions different from ordinary rules is their potential ability to create a focal point that conditions the expectations of individuals on a certain equilibrium strategy. Hence, constitutions help to solve coordination problems, not cooperation problems.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2000/wp-cesifo-2000-11/cesifo_wp357.pdf
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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 357.

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Date of creation: 2000
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Handle: RePEc:ces:ceswps:_357

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Keywords: Anarchy; constitution; redistribution;

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References

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Citations

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Cited by:
  1. J. Amegashie, 2008. "Incomplete property rights, redistribution, and welfare," Social Choice and Welfare, Springer, vol. 30(4), pages 685-699, May.
  2. Powell, Benjamin & Stringham, Edward P., 2008. "Public Choice and the Economic Analysis of Anarchy: A Survey," Working Papers 2008-7, Suffolk University, Department of Economics.
  3. Bergh, Andreas, 2008. "A critical note on the theory of inequity aversion," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 37(5), pages 1789-1796, October.
  4. Caruso Raul, 2011. "On the Nature of Peace Economics," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 16(2), pages 1-13, January.
  5. Harold Houba & Hans-Peter Weikard, 2009. "Stone Age Equilibrium," Tinbergen Institute Discussion Papers 09-092/1, Tinbergen Institute.
  6. Rubinchik, Anna & Samaniego, Roberto M., . "Demand For Contract Enforcement in A Barter Environment," Working Papers WP2011/15, University of Haifa, Department of Economics, revised 06 Dec 2011.
  7. Dieter Bös, 2002. "Contests Among Bureaucrats," Bonn Econ Discussion Papers bgse27_2002, University of Bonn, Germany.

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