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Inefficient Redistribution and Inefficient Redistributive Politics

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  • Dan Kovenock
  • Brian Roberson

Abstract

This paper examines the effect of inefficient redistribution in Myerson’s (1993) model of redistributive politics. Regardless of the absolute levels of the efficiency of political parties’ transfers to different voter segments, parties have incentive to (stochastically) shift resources away from voter segments with large relative efficiency gaps between the two parties’ transfers towards voter segments with smaller relative efficiency gaps. Because of this dependence on relative, and not absolute, levels of efficiency, the parties’ optimal strategies may lead to large discrepancies between the sum of the budgetary transfers and the sum of the effective transfers. At the extreme, in the spirit of Magee, Brock, and Young (1989), we obtain “black hole” inefficiency. When the model is extended to allow for loyal voter segments and loyalty to a party is positively related to the efficiency of that party’s transfers to the segment, the incentives leading to black hole inefficiency become even stronger.

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Paper provided by Purdue University, Department of Economics in its series Purdue University Economics Working Papers with number 1206.

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Length: 11 pages
Date of creation: Nov 2007
Date of revision:
Handle: RePEc:pur:prukra:1206
Contact details of provider: Postal: Krannert Building, West Lafayette, IN 47907
Web page: http://www.krannert.purdue.edu/programs/phd
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Find related papers by JEL classification:
  • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
  • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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  1. Kovenock, Dan & Robertson, Brian, 2005. "Electoral Poaching and Party Identification," Purdue University Economics Working Papers 1178, Purdue University, Department of Economics.
  2. Kovenock, D. & de Vries, C.G., 1995. "The All-Pay Auction with Complete Information," UFAE and IAE Working Papers 311.95, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
  3. Lien, Da-Hsiang Donald, 1990. "Corruption and allocation efficiency," Journal of Development Economics, Elsevier, vol. 33(1), pages 153-164, July.
  4. Acemoglu, Daron & Robinson, James A, 1999. "Inefficient Redistribution," CEPR Discussion Papers 2122, C.E.P.R. Discussion Papers.
  5. Clark, Derek J. & Riis, Christian, 2000. "Allocation efficiency in a competitive bribery game," Journal of Economic Behavior & Organization, Elsevier, vol. 42(1), pages 109-124, May.
  6. Arye L. Hillman & John G. Riley, 1989. "Politically Contestable Rents And Transfers," Economics and Politics, Wiley Blackwell, vol. 1(1), pages 17-39, 03.
  7. Kai A. Konrad, 2002. "Investment in the Absence of Property Rights: The Role of Incumbency Advantages," CESifo Working Paper Series 698, CESifo Group Munich.
  8. Brian Roberson, 2006. "The Colonel Blotto game," Economic Theory, Springer, vol. 29(1), pages 1-24, September.
  9. Becker, Gary S, 1983. "A Theory of Competition among Pressure Groups for Political Influence," The Quarterly Journal of Economics, MIT Press, vol. 98(3), pages 371-400, August.
  10. Baye, M. & Kovenock, D. & Vries, C. de, 1990. "The All-Pay Auction with Complete Information," Discussion Paper 1990-51, .
  11. Nicolas Sahuguet & Nicola Persico, 2006. "Campaign spending regulation in a model of redistributive politics," Economic Theory, Springer, vol. 28(1), pages 95-124, 05.
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Cited by:

  1. Kovenock, Dan & Roberson, Brian, 2009. "Non-partisan 'Get-out-the-vote' efforts and policy outcomes," Discussion Papers, Research Unit: Market Processes and Governance SP II 2009-07, Social Science Research Center Berlin (WZB).
  2. Chowdhury, Subhasish M. & Kovenock, Dan & Sheremeta, Roman M., 2009. "An experimental investigation of Colonel Blotto games
    [Eine experimentelle Untersuchung von „Colonel Blotto“-Spielen]    ," Discussion Papers, Research Unit: Market Processes and Governance SP II 2009-08, Social Science Research Center Berlin (WZB).
  3. Marcin Dziubiński, 2013. "Non-symmetric discrete General Lotto games," International Journal of Game Theory, Springer, vol. 42(4), pages 801-833, November.
  4. Stefan Homburg, 2011. "Colonel Blotto und seine ökonomischen Anwendungen," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 12(1), pages 1-11, 02.

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