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The Social Discount Rate Under Majority Voting

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  • GLAZER, A.

Abstract

If each voter is a price taker who consumes a bundle of goods such that his marginal rate of substitution equals the relative prices of goods in different periods, all consumers will have the same marginal rate of time preference. This seems to suggest that voters will unanimously agree on the social discount rate. Such reasoning ignores, however, the effects of different investment policies on the relative prices of goods in different periods. A consideration of this effect shows that a majority of voters may prefer a social discount rate that allows the adoption of inefficient investments.
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Suggested Citation

  • Glazer, A., 1988. "The Social Discount Rate Under Majority Voting," Papers 88-03, California Irvine - School of Social Sciences.
  • Handle: RePEc:fth:calirv:88-03
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    Cited by:

    1. Glazer, Amihai & Kanniainen, Vesa & Niskanen, Esko, 2003. "Bequests, control rights, and cost-benefit analysis," European Journal of Political Economy, Elsevier, vol. 19(1), pages 71-82, March.

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    Keywords

    banks ; discount ; voting ; interest rate;

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