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Anarchy, efficiency, and redistribution

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  • Bos, Dieter
  • Kolmar, Martin

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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  • Bos, Dieter & Kolmar, Martin, 2003. "Anarchy, efficiency, and redistribution," Journal of Public Economics, Elsevier, vol. 87(11), pages 2431-2457, October.
  • Handle: RePEc:eee:pubeco:v:87:y:2003:i:11:p:2431-2457
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    Cited by:

    1. Benjamin Powell & Edward Stringham, 2009. "Public choice and the economic analysis of anarchy: a survey," Public Choice, Springer, vol. 140(3), pages 503-538, September.
    2. J. Amegashie, 2008. "Incomplete property rights, redistribution, and welfare," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 30(4), pages 685-699, May.
    3. Anna Rubinchik & Roberto Samaniego, 2013. "Demand for contract enforcement in a barter environment," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 41(1), pages 73-97, June.
    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. Feige, Christian & Ehrhart, Karl-Martin, 2015. "Voting and transfer payments in a threshold public goods game," Working Paper Series in Economics 73, Karlsruhe Institute of Technology (KIT), Department of Economics and Business Engineering.
    6. 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.

    More about this item

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • D30 - Microeconomics - - Distribution - - - General
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • H10 - Public Economics - - Structure and Scope of Government - - - General

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