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Competition of Politicians for Incentive Contracts and Elections

  • Hans Gersbach

When politicians are short-term oriented or future elections do not sufficiently reflect the success of past policies, democratic elections cannot motivate politicians to undertake long-term socially beneficial projects. When politicians can offer incentive contracts which become effective upon reelection, the hierarchy of contracts and elections can alleviate such inefficient decision-making in politics. This mechanism still works if the public cannot commit itself to a reelection scheme or if the public is unsure about the politicians’ time preferences. In the non-commitment case, incentive contracts may need to include a golden parachute clause. Copyright Kluwer Academic Publishers 2004

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Article provided by Springer in its journal Public Choice.

Volume (Year): 121 (2004)
Issue (Month): 1 (October)
Pages: 157-177

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Handle: RePEc:kap:pubcho:v:121:y:2004:i:1:p:157-177
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