nep-cdm New Economics Papers
on Collective Decision-Making
Issue of 2007‒10‒13
four papers chosen by
Roland Kirstein
Otto von Guericke University Magdeburg

  1. Simulating voting rule reforms for the Italian parliament. An economic perspective By Ottone, Stefania; Ponzano, Ferruccio; Ricciuti, Roberto
  2. An experimental inquiry into the effect of yardstick competition on corruption By Angelino Viceisza
  3. Public Sector Capital and the Transition from Dictatorship to Democracy By Christopher J. Ellis; John Fender
  4. Does Tax Competition Tame the Leviathan? By Brülhart, Marius; Jametti, Mario

  1. By: Ottone, Stefania; Ponzano, Ferruccio; Ricciuti, Roberto
    Abstract: The aim of this paper is to contribute to the debate about the electoral rules in Italy. In particular, we simulate some voting rules to test what is the best electoral system on the basis of a utility function that takes into account two indices – representativeness and governability. As long as governability is important, a mixed member system (75% plurality, 25% proportional representation) outperforms the others. Our tool is the software ALEX4.1.
    Keywords: Italian Parliament, electoral system, simulations
    JEL: A12 C88 D72
    Date: 2007–10
  2. By: Angelino Viceisza
    Abstract: This study reports theory-testing laboratory experiments on the effect of yardstick competition on corruption. On the incumbent side, yardstick competition acts as a corruption-taming mechanism if the incumbent politician is female. On the voter side, voters focus on the difference between the tax rate in their own jurisdiction and that in another. If the tax rate is deemed unfair compared to the one in another jurisdiction, voters re-elect less. The findings support the claim by Besley and Case (1995) that incumbent behavior and tax setting are tied together through the nexus of yardstick competition. This renders generalizability to these laboratory experiments and addresses some concerns raised by Levitt and List (2007).
    Keywords: Corruption, Yardstick Competition, Political Agency, Asymmetric
    JEL: C92 D72 D73 D82 H73
    Date: 2007–10
  3. By: Christopher J. Ellis; John Fender
    Abstract: A model where a dictator decides on both the level of public-sector capital and whether to democratize is constructed. Under dictatorship the labor market is monopsonistic; democratization involves instituting a competitive labor market. Workers sometimes have a credible threat of revolution and this may affect the dictator’s investment decision; it may also induce democratization. The possibility of a “political development trap”, where the dictator stifles development to stay in power, emerges. The model is used, inter alia, to explain the effects of the 1832 Reform Act in the UK and the worldwide positive correlation between income and democracy.
    Keywords: Democracy, dictatorship, public sector capital, franchise extension, revolution
    JEL: H54 O43
    Date: 2007–08
  4. By: Brülhart, Marius; Jametti, Mario
    Abstract: We study the impact of tax competition on equilibrium taxes and welfare, focusing on the jurisdictional fragmentation of federations. In a representative-agent model of fiscal federalism, fragmentation among jurisdictions with benevolent tax-setting authorities unambiguously reduces welfare. If, however, tax-setting authorities pursue revenue maximization, fragmentation, by pushing down equilibrium tax rates, may under certain conditions increase citizen welfare. We exploit the highly decentralized and heterogeneous Swiss fiscal system as a laboratory for the estimation of these effects. While for purely direct-democratic jurisdictions (which we associate with benevolent tax setting) we find that tax rates increase in fragmentation, fragmentation has a moderating effect on the tax rates of jurisdictions with some degree of delegated government. Our results thereby support the view that tax competition can be second-best welfare enhancing by constraining the scope for public-sector revenue maximization.
    Keywords: direct democracy; fiscal federalism; government preferences; optimal taxation; tax competition
    JEL: D7 H2 H7
    Date: 2007–10

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