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Democratic Mechanisms: Double Majority Rules and Flexible Agenda Costs

  • Hans Gersbach

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.

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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 749.

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Date of creation: 2002
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Handle: RePEc:ces:ceswps:_749
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