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Mackerels in the Moonlight: A Duopoly Model of Political Agency

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  • Evrenk, Haldun

    ()
    (Suffolk University, Department of Economics)

Abstract

I study political competition between two candidates who could differ in their ability, popularity, and ethics. In elections, each candidate proposes a flat (income) tax rate and a public good level. A high(er)-ability candidate can produce the public good using less funds. Collected taxes that are not used in public goods production are stolen by the elected politician. The voting decision is probabilistic; it depends on a candidate's fiscal policy and his popularity. I prove that the pure strategy Nash Equilibrium exists and that there are at most two separate equilibria. I also provide a fully solved example.

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Bibliographic Info

Paper provided by Suffolk University, Department of Economics in its series Working Papers with number 2008-4.

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Length: 35 pages
Date of creation: 25 Apr 2008
Date of revision:
Handle: RePEc:suf:wpaper:2008-4

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Web page: http://www.suffolk.edu/college/2175.html
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Related research

Keywords: Political Agency; Political Corruption; Nash Equilibrium;

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  1. Evrenk, Haldun, 2008. "A Game-Theoretic Explanation for the Persistence of Political Corruption," Working Papers 2008-3, Suffolk University, Department of Economics.
  2. Michele Polo, . "Electoral competition and political rents," Working Papers 144, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  3. Roger B. Myerson, 1991. "Effectiveness of Electoral Systems for Reducing Government Corruption: A Game-Theoretic Analysis," Discussion Papers 956, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  4. John Douglas Wilson, 1989. "An Optimal Tax Treatment Of Leviathan," Economics and Politics, Wiley Blackwell, vol. 1(2), pages 97-117, 07.
  5. Grossman, Gene & Helpman, Elhanan, 1993. "Protection for Sale," CEPR Discussion Papers 827, C.E.P.R. Discussion Papers.
  6. Francesco Caselli & Massimo Morelli, 2001. "Bad Politicians," NBER Working Papers 8532, National Bureau of Economic Research, Inc.
  7. Timothy Besley & Michael Smart, 2005. "Fiscal Restraints and Voter Welfare," STICERD - Political Economy and Public Policy Paper Series 06, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
  8. Szentes, Balazs & Rosenthal, Robert W., 2003. "Three-object two-bidder simultaneous auctions: chopsticks and tetrahedra," Games and Economic Behavior, Elsevier, vol. 44(1), pages 114-133, July.
  9. George Warskett & Stanley Winer & Walter Hettich, 1998. "The Complexity of Tax Structure in Competitive Political Systems," International Tax and Public Finance, Springer, vol. 5(2), pages 123-151, May.
  10. John Ferejohn, 1986. "Incumbent performance and electoral control," Public Choice, Springer, vol. 50(1), pages 5-25, January.
  11. Brennan,Geoffrey & Buchanan,James M., 1980. "The Power to Tax," Cambridge Books, Cambridge University Press, number 9780521233293.
  12. Evrenk, Haldun, 2008. "On the (In)Effectiveness of Some Commonly Proposed Anti-Corruption Reforms," Working Papers 2008-5, Suffolk University, Department of Economics.
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Cited by:
  1. Evrenk, Haldun, 2008. "On the (In)Effectiveness of Some Commonly Proposed Anti-Corruption Reforms," Working Papers 2008-5, Suffolk University, Department of Economics.
  2. Evrenk, Haldun, 2008. "A Game-Theoretic Explanation for the Persistence of Political Corruption," Working Papers 2008-3, Suffolk University, Department of Economics.

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