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Democratic Mechanisms: Double Majority Rules and Flexible Agenda Costs

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  • Gersbach, Hans

Abstract

We develop democratic mechanisms where individual utilities are not observable by other people at the legislative stage. We show that an appropriate combination of three rules can yield efficient provision of public projects: first, flexible and double majority rules where the size of the majority depends on the proposal and verifiable parameters 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 provide a rationale why double majority rules are used in practice. We also show that higher degrees of uncertainty about project parameters can make it easier to achieve first-best allocations and that universal equal treatment with regard to taxation is undesirable.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 5013.

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Date of creation: Apr 2005
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Handle: RePEc:cpr:ceprdp:5013

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Keywords: democratic constitutions; double majority rules; flexible agenda cost rules; unobservable utilities;

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Cited by:
  1. Aghion, Philippe & Bolton, Patrick, 2003. "Incomplete Social Contracts," Scholarly Articles 4554123, Harvard University Department of Economics.
  2. Toke S Aidt & Francesco Giovannoni, 2004. "Constitutional Rules," The Centre for Market and Public Organisation 04/109, Department of Economics, University of Bristol, UK.
  3. Toke Aidt & Francesco Giovannoni, 2011. "Critical decisions and constitutional rules," Social Choice and Welfare, Springer, vol. 37(2), pages 219-268, July.
  4. Gersbach, Hans & Siemers, Lars, 2005. "Can Democracy Educate a Society?," IZA Discussion Papers 1693, Institute for the Study of Labor (IZA).
  5. Bierbrauer, Felix & Sahm, Marco, 2006. "Informative Voting and the Samuelson Rule," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 159, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
  6. Lukach, R. & Plasmans, J.E.J., 2002. "Measuring Knowledge Spillovers using Patent Citations: Evidence from the Belgian Firm's Data," Open Access publications from Tilburg University urn:nbn:nl:ui:12-92281, Tilburg University.
  7. Felix Bierbrauer & Marco Sahm, 2006. "Informative Voting and the Samuelson Rule," Working Paper Series of the Max Planck Institute for Research on Collective Goods 2006_18, Max Planck Institute for Research on Collective Goods.
  8. Felix Bierbrauer & Marco Sahm, 2008. "Optimal Democratic Mechanisms for Taxation and Public Good Provision," Working Paper Series of the Max Planck Institute for Research on Collective Goods 2008_09, Max Planck Institute for Research on Collective Goods.

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