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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.

Suggested Citation

  • Dan Kovenock & Brian Roberson, 2007. "Inefficient Redistribution and Inefficient Redistributive Politics," Purdue University Economics Working Papers 1206, Purdue University, Department of Economics.
  • Handle: RePEc:pur:prukra:1206
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    References listed on IDEAS

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    1. Nicolas Sahuguet & Nicola Persico, 2006. "Campaign spending regulation in a model of redistributive politics," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 28(1), pages 95-124, May.
    2. Dan Kovenock & Brian Roberson, 2008. "Electoral Poaching and Party Identification," Journal of Theoretical Politics, , vol. 20(3), pages 275-302, July.
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    5. Dixit, Avinash & Londregan, John, 1995. "Redistributive Politics and Economic Efficiency," American Political Science Review, Cambridge University Press, vol. 89(04), pages 856-866, December.
    6. Arye L. Hillman & John G. Riley, 1989. "Politically Contestable Rents And Transfers," Economics and Politics, Wiley Blackwell, vol. 1(1), pages 17-39, March.
    7. Acemoglu, Daron & Robinson, James A., 2001. "Inefficient Redistribution," American Political Science Review, Cambridge University Press, vol. 95(03), pages 649-661, September.
    8. 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.
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    10. Brian Roberson, 2006. "The Colonel Blotto game," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 29(1), pages 1-24, September.
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    Cited by:

    1. Boyer, Pierre C. & Konrad, Kai A. & Roberson, Brian, 2017. "Targeted campaign competition, loyal voters, and supermajorities," Journal of Mathematical Economics, Elsevier, vol. 71(C), pages 49-62.
    2. Subhasish Chowdhury & Dan Kovenock & Roman Sheremeta, 2013. "An experimental investigation of Colonel Blotto games," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 52(3), pages 833-861, April.
    3. Glaeser, Edward L. & Ponzetto, Giacomo A.M., 2014. "Shrouded costs of government: The political economy of state and local public pensions," Journal of Public Economics, Elsevier, vol. 116(C), pages 89-105.
    4. Kovenock, Dan & Roberson, Brian, 2011. "Non-partisan ‘get-out-the-vote’ efforts and policy outcomes," European Journal of Political Economy, Elsevier, vol. 27(4), pages 728-739.
    5. Marcin Dziubiński, 2013. "Non-symmetric discrete General Lotto games," International Journal of Game Theory, Springer;Game Theory Society, vol. 42(4), pages 801-833, November.
    6. Stefan Homburg, 2011. "Colonel Blotto und seine ökonomischen Anwendungen," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 12(1), pages 1-11, February.
    7. Esslinger, Christoph & Boyer, Pierre, 2015. "Public debt and the political economy of reforms," Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 113107, Verein für Socialpolitik / German Economic Association.

    More about this item

    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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