Democratic Provision of Divisible Public Goods
In this paper we examine the potential of democratic constitutions for the provision of divisible public goods in a large economy. Our main insights are as follows: When aggregate shocks are absent, the combination of the following rules yields first-best allocations: a supermajority rule, equal taxation, exemption of the agenda setter from taxation, and a ban on subsidies. In the presence of aggregate shocks to benefits or to costs of public-good provision, tax-sensitive majority rules, where the size of the required majority depends on the aggregate tax revenues, yield first-best allocations if a monotonicity condition is met. Finally, we explore the potential of first-best constitutions to induce voluntary participation by compensating agents belonging to the minority.
|Date of creation:||2010|
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- Philippe Aghion & Patrick Bolton, 2003.
"Incomplete Social Contracts,"
Journal of the European Economic Association,
MIT Press, vol. 1(1), pages 38-67, 03.
- Aghion, Philippe & Bolton, Patrick, 2003. "Incomplete Social Contracts," Scholarly Articles 4554123, Harvard University Department of Economics.
- Philippe Aghion & Alberto Alesina & Francesco Trebbi, 2004. "Endogenous Political Institutions," The Quarterly Journal of Economics, Oxford University Press, vol. 119(2), pages 565-611.
- Philippe Aghion & Alberto Alesina & Francesco Trebbi, 2002. "Endogenous Political Institutions," NBER Working Papers 9006, National Bureau of Economic Research, Inc.
- Aghion, Philippe & Alesina, Alberto & Trebbi, Francesco, 2004. "Endogenous Political Institutions," Scholarly Articles 4481498, Harvard University Department of Economics.
- Philippe Aghion & Albero Alesina & Francesco Trebbi, 2002. "Endogenous Political Institutions," Harvard Institute of Economic Research Working Papers 1957, Harvard - Institute of Economic Research.
- Aghion, Philippe & Alesina, Alberto F & Trebbi, Francesco, 2002. "Endogenous Political Institutions," CEPR Discussion Papers 3473, C.E.P.R. Discussion Papers.
- Hellwig, Martin F., 2005. "A utilitarian approach to the provision and pricing of excludable public goods," Journal of Public Economics, Elsevier, vol. 89(11-12), pages 1981-2003, December.
- Hellwig, Martin, 2003. "A utilitarian approach to the provision and pricing of excludable public goods," Papers 03-36, Sonderforschungsbreich 504.
- Hellwig, Martin, 2003. "A Utilitarian Approach to the Provision and Pricing of Excludable Public Goods," Sonderforschungsbereich 504 Publications 03-36, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.
- Martin F. Hellwig, 2003. "Public-Good Provision with Many Participants," Review of Economic Studies, Oxford University Press, vol. 70(3), pages 589-614.
- Hans Gersbach, 2009. "Democratic Mechanisms," Journal of the European Economic Association, MIT Press, vol. 7(6), pages 1436-1469, December.
- Bård Harstad, 2005. "Majority Rules and Incentives," The Quarterly Journal of Economics, Oxford University Press, vol. 120(4), pages 1535-1568. Full references (including those not matched with items on IDEAS)
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