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Anarchy, Efficiency and Redistribution

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  • Bös, Dieter
  • Kolmar, Martin

Abstract

The purpose of this paper is twofold. We first develop a contractarian theory of redistribution. The existence of rules of redistribution is explained without any recourse to the risk-aversion of individuals. Hence, we depart from the standard legitimization of redistribution as fundamental insurance and interpret it as stemming from a principle of reciprocity in trade. The second purpose of the paper is to develop a theory of institutions that implement optimal allocations. We depart from the assumption of an exogenous enforcement of constitutional rules. Hence, the self-enforcement of constitutional rules is crucial for the implementability of allocations. This approach implies that there is no allocative difference between constitutional and ordinary rules. What makes constitutions different from ordinary rules is their potential ability to create a focal point that conditions the expectations of individuals on a certain equilibrium strategy. Hence, constitutions help to solve coordination problems, not cooperation problems.

Suggested Citation

  • Bös, Dieter & Kolmar, Martin, 2000. "Anarchy, Efficiency and Redistribution," Bonn Econ Discussion Papers 10/2000, University of Bonn, Bonn Graduate School of Economics (BGSE).
    • Handle: RePEc:zbw:bonedp:102000
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    References listed on IDEAS

    as
    1. Bush, Winston C. & Mayer, Lawrence S., 1974. "Some implications of anarchy for the distribution of property," Journal of Economic Theory, Elsevier, vol. 8(4), pages 401-412, August.
    2. repec:hhs:iuiwop:477 is not listed on IDEAS
    3. Michael R. Baye & Dan Kovenock & Casper G. Vries, 2008. "Rigging the lobbying process: An application of the all-pay auction," Springer Books, in: Roger D. Congleton & Kai A. Konrad & Arye L. Hillman (ed.), 40 Years of Research on Rent Seeking 2, pages 331-336, Springer.
    4. Anderson, James E. & Marcouiller, S.J. Douglas, 1997. "Trade and Security, I: Anarchy," Working Paper Series 477, Research Institute of Industrial Economics.
    5. Amann, Erwin & Leininger, Wolfgang, 1996. "Asymmetric All-Pay Auctions with Incomplete Information: The Two-Player Case," Games and Economic Behavior, Elsevier, vol. 14(1), pages 1-18, May.
    6. Costas Azariadis & Vincenzo Galasso, 1998. "Constitutional “Rules” and Intergenerational Fiscal Policy," Constitutional Political Economy, Springer, vol. 9(1), pages 67-74, March.
    7. Ken Binmore, 1998. "Game Theory and the Social Contract - Vol. 2: Just Playing," MIT Press Books, The MIT Press, edition 1, volume 2, number 0262024446, April.
    8. Esteban, Joan & Ray, Debraj, 1999. "Conflict and Distribution," Journal of Economic Theory, Elsevier, vol. 87(2), pages 379-415, August.
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    Cited by:

    1. Dieter Bös, 2004. "Contests Among Bureaucrats," Public Choice, Springer, vol. 119(3_4), pages 359-380, June.
    2. Bos, Dieter & Kolmar, Martin, 2003. "Anarchy, efficiency, and redistribution," Journal of Public Economics, Elsevier, vol. 87(11), pages 2431-2457, October.

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    More about this item

    Keywords

    Anarchy; Constitution; Redistribution;
    All these keywords.

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • D30 - Microeconomics - - Distribution - - - General
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • H10 - Public Economics - - Structure and Scope of Government - - - General

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