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Democratic Mechanisms: Double Majority Rules and Flexible Agenda Costs

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  • Hans Gersbach

Abstract

We introduce democratic mechanisms where individual utilities are not observable by other people at the legislative stage. We show that the combination of three rules can yield e±cient provision of public projects: first, flexible and double majority rules where the size of the majority depends on the proposal and taxed and non-taxed individuals need to support the proposal; second, flexible agenda costs where the agenda-setter has to pay a certain amount of money if his proposal does not generate enough supporting votes; third, a ban on subsidies. We also illustrate that higher dimensional uncertainty about project parameters can make it easier to achieve first-best allocations and that universal equal treatment with regard to taxation is undesirable.

Suggested Citation

  • Hans Gersbach, 2002. "Democratic Mechanisms: Double Majority Rules and Flexible Agenda Costs," CESifo Working Paper Series 749, CESifo.
    • Handle: RePEc:ces:ceswps:_749
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    Cited by:

    1. Toke S Aidt & Francesco Giovannoni, 2004. "Constitutional Rules," The Centre for Market and Public Organisation 04/109, The Centre for Market and Public Organisation, University of Bristol, UK.
    2. Lukach, R. & Plasmans, J.E.J., 2002. "Measuring Knowledge Spillovers using Patent Citations : Evidence from the Belgian Firm's Data," Other publications TiSEM d78bf59a-e0ff-4451-86b9-1, Tilburg University, School of Economics and Management.
    3. Sahm, Marco, 2006. "Essays in Public Economic Theory," Munich Dissertations in Economics 5633, University of Munich, Department of Economics.
    4. Toke Aidt & Francesco Giovannoni, 2011. "Critical decisions and constitutional rules," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 37(2), pages 219-268, July.
    5. Felix Bierbrauer & Marco Sahm, 2008. "Optimal Democratic Mechanisms for Taxation and Public Good Provision," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2008_09, Max Planck Institute for Research on Collective Goods.
    6. Gersbach, Hans & Siemers, Lars, 2005. "Can Democracy Educate a Society?," IZA Discussion Papers 1693, Institute of Labor Economics (IZA).
    7. Philippe Aghion & Patrick Bolton, 2003. "Incomplete Social Contracts," Journal of the European Economic Association, MIT Press, vol. 1(1), pages 38-67, March.
    8. Bierbrauer, Felix & Sahm, Marco, 2006. "Informative Voting and the Samuelson Rule," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 159, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    9. Felix Bierbrauer & Marco Sahm, 2006. "Informative Voting and the Samuelson Rule," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2006_18, Max Planck Institute for Research on Collective Goods.

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    More about this item

    Keywords

    democratic constitutions; unobservable utilities; double majority rules; flexible agenda cost rules;
    All these keywords.

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H40 - Public Economics - - Publicly Provided Goods - - - General

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