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Rights and judicial independence

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  • Yukihiro Yazaki

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Abstract

This paper models endogenous judicial independence (JI) as a commitment device in a political commitment game between a ruler and citizens. In a situation where citizens can observe the effectiveness of JI with some positive probability, the model shows that the ruler in fact creates an independent judiciary and credibly commits to an announced tax rate, i.e., the ruler protects private property rights. Even when citizens have no chance to observe the effectiveness of JI, the ruler can still guarantee property rights by granting human rights as a signal of JI. Although the creation of JI achieves a Pareto improvement compared with its lack, two sources of inefficiency arise. First, the equilibrium tax is inefficiently high in the sense that the tax rate is on the inefficient side of the Laffer curve. This inefficiently high tax reflects the cost of credible commitment. Second, equilibrium JI for guaranteeing human rights is inefficiently high in the sense that the ruler does not entirely use JI for credibly committing to a low tax. This inefficiently high JI represents the cost of credible signalling. Copyright Springer-Verlag Berlin Heidelberg 2014

Suggested Citation

  • Yukihiro Yazaki, 2014. "Rights and judicial independence," Economics of Governance, Springer, vol. 15(2), pages 179-201, May.
  • Handle: RePEc:spr:ecogov:v:15:y:2014:i:2:p:179-201
    DOI: 10.1007/s10101-014-0139-4
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    References listed on IDEAS

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    More about this item

    Keywords

    Judicial independence; Property rights; Human rights; Commitment; H2; K40; O10; P16; P48;

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • K40 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - General
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism
    • P48 - Economic Systems - - Other Economic Systems - - - Political Economy; Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies

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