Laffer paradox, Leviathan, and Political Contest
This paper considers a political contest model wherein self-interested politicians seek rents from the public budget, while general voters make political efforts to protest against politicians' rent seeking directly (for example, through voting in referendums such as the passage of Proposition 13) or indirectly (for example, through donating money to organized groups such as the National Taxpayer Union). We show that the political contest may ironically lead to the Laffer paradox; that is, rent-seeking politicians may intend to set the tax rate higher than the revenue-maximizing rate. For taming Leviathans, political protests may not be as effective as competition among governments.
|Date of creation:||Oct 2010|
|Contact details of provider:|| Postal: Hongo 7-3-1, Bunkyo-ku, Tokyo 113-0033|
Web page: http://www.cirje.e.u-tokyo.ac.jp/index.html
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Wrede, Matthias, 1999. "Tragedy of the Fiscal Common?: Fiscal Stock Externalities in a Leviathan Model of Federalism," Public Choice, Springer, vol. 101(3-4), pages 177-193, December.
- Jeremy Edwards & Michael Keen, 1994.
"Tax competition and Leviathon,"
IFS Working Papers
W94/07, Institute for Fiscal Studies.
- Long, Ngo Van & Vousden, Neil J, 1987. "Risk-Averse Rent Seeking with Shared Rents," Economic Journal, Royal Economic Society, vol. 97(388), pages 971-985, December.
- Besley, Timothy & Smart, Michael, 2007.
"Fiscal restraints and voter welfare,"
Journal of Public Economics,
Elsevier, vol. 91(3-4), pages 755-773, April.
- Timothy Besley & Michael Smart, 2005. "Fiscal Restraints and Voter Welfare," STICERD - Political Economy and Public Policy Paper Series 06, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
- Timothy Besley & Michael Smart, 2005. "Fiscal restraints and voter welfare," LSE Research Online Documents on Economics 3769, London School of Economics and Political Science, LSE Library.
- Nitzan, Shmuel, 1994. "Modelling rent-seeking contests," European Journal of Political Economy, Elsevier, vol. 10(1), pages 41-60, May.
- Anderson, G M & Shughart, William F, II & Tollison, R D, 1989. "Political Entry Barriers and Tax Incidence: The Political Economy of Sales and Excise Taxes," Public Finance = Finances publiques, , vol. 44(1), pages 8-18.
- Michelle R. Garfinkel & Stergios Skaperdas, 2006.
"Economics of Conflict: An Overview,"
050623, University of California-Irvine, Department of Economics, revised Sep 2006.
- Hoyt, William H., 1999. "Leviathan, local government expenditures, and capitalization," Regional Science and Urban Economics, Elsevier, vol. 29(2), pages 155-171, March.
- Gary S. Becker, 1983. "A Theory of Competition Among Pressure Groups for Political Influence," The Quarterly Journal of Economics, Oxford University Press, vol. 98(3), pages 371-400.
- Cheikbossian, Guillaume, 2008.
"Heterogeneous groups and rent-seeking for public goods,"
European Journal of Political Economy,
Elsevier, vol. 24(1), pages 133-150, March.
- Cheikbossian, Guillaume, 2005. "Heterogenous Groups and Rent-Seeking for Public Goods," Cahiers du LASER (LASER Working Papers) 2005.16, LASER (Laboratoire de Science Economique de Richter), Faculty of Economics, University of Montpellier 1.
- Wenders, John T, 1987. "On Perfect Rent Dissipation," American Economic Review, American Economic Association, vol. 77(3), pages 456-459, June.
- Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64, pages 416-416.
When requesting a correction, please mention this item's handle: RePEc:tky:fseres:2010cf769. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (CIRJE administrative office)
If references are entirely missing, you can add them using this form.