Channeling the final Say in Politics
We examine how the final say in a sequence of proposals for local public project provision, financing, and redistribution can be channeled towards socially desirable outcomes, thereby breaking the dictatorial power of the last agenda-setter. Individuals are heterogeneous with some citizens benefiting from the public project (winners) and the rest losing (losers) relative to per-capita costs. Our main insight is that a simple ban on subsidies for the proposal-makers can achieve the purpose whenever the first proposal-maker is a winner and the second proposal-maker is a loser. Such a ban induces project winners to make efficient public project proposals that are however coupled with socially undesirable subsidy schemes. The best possible amendment for project losers is then to match the project proposal and to eliminate all subsidies. We further show that two-round proposal-making constitutes the minimal form of political competition yielding first-best outcomes and that restrictions on tax schemes are socially desirable.
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| Length: | 42 pages |
| Date of creation: | Aug 2012 |
| Handle: | RePEc:eth:wpswif:12-164 |
| Contact details of provider: | Postal: Zürichbergstrasse 18, ZUE, CH-8092 Zürich Phone: +41 44 632 03 87 Fax: +41 44 632 13 62 Web page: http://www.cer.ethz.ch Email: More information through EDIRC
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References listed on IDEAS
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- Diermeier, Daniel & Merlo, Antonio, 2000.
"Government Turnover in Parliamentary Democracies,"
Journal of Economic Theory,
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- Diermeier, Daniel & Merlo, Antonio, 1998. "Government Turnover in Parliamentary Democracies," Working Papers 98-31, C.V. Starr Center for Applied Economics, New York University.
- Daniel Diermeier & Antonio Merlo, 1998. "Government Turnover in Parliamentary Democracies," Discussion Papers 1232, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Diermeier, Daniel & Merlo, Antonio, 1998. "Government turnover in parliamentary democracies," Bulletins 7453, University of Minnesota, Economic Development Center.
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- DUTTA, Bhaskar & JACKSON, Matthew O. & LE BRETON, Michel, 1999. "Strategic candidacy and voting procedures," CORE Discussion Papers 1999011, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Banks, Jeffrey S. & Gasmi, Farid., 1986. "Endogenous Agenda Formation in Three-Person Committees," Working Papers 603, California Institute of Technology, Division of the Humanities and Social Sciences.
- Jackson, Matthew O. & Moselle, Boaz, 2002. "Coalition and Party Formation in a Legislative Voting Game," Journal of Economic Theory, Elsevier, vol. 103(1), pages 49-87, March.
- Jackson, Matthew O. & Moselle, Boaz, 1998. "Coalition and Party Formation in a Legislative Voting Game," Working Papers 1036, California Institute of Technology, Division of the Humanities and Social Sciences.
- McKelvey, Richard D, 1979. "General Conditions for Global Intransitivities in Formal Voting Models," Econometrica, Econometric Society, vol. 47(5), pages 1085-1112, September.
- McKelvey, Richard D., 1976. "Intransitivities in multidimensional voting models and some implications for agenda control," Journal of Economic Theory, Elsevier, vol. 12(3), pages 472-482, June. Full references (including those not matched with items on IDEAS)
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