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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. Brennan,Geoffrey & Buchanan,James M., 2006. "The Power to Tax," Cambridge Books, Cambridge University Press, number 9780521027922, April.
  2. Caselli, Francesco & Morelli, Massimo, 2004. "Bad politicians," Journal of Public Economics, Elsevier, vol. 88(3-4), pages 759-782, March.
  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. Grossman, G.M. & Helpman, E., 1992. "Protection for Sale," Papers 162, Princeton, Woodrow Wilson School - Public and International Affairs.
  5. Evrenk, Haldun, 2008. "On the (In)Effectiveness of Some Commonly Proposed Anti-Corruption Reforms," Working Papers 2008-5, Suffolk University, Department of Economics.
  6. Michele Polo, . "Electoral competition and political rents," Working Papers 144, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  7. Besley, Timothy & Smart, Michael, 2007. "Fiscal restraints and voter welfare," Journal of Public Economics, Elsevier, vol. 91(3-4), pages 755-773, April.
  8. John Ferejohn, 1986. "Incumbent performance and electoral control," Public Choice, Springer, vol. 50(1), pages 5-25, January.
  9. 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.
  10. 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.
  11. John Douglas Wilson, 1989. "An Optimal Tax Treatment Of Leviathan," Economics and Politics, Wiley Blackwell, vol. 1(2), pages 97-117, 07.
  12. 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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Cited by:
  1. Evrenk, Haldun, 2008. "A Game-Theoretic Explanation for the Persistence of Political Corruption," Working Papers 2008-3, Suffolk University, Department of Economics.
  2. 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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