New Economics Papers
on Collective Decision-Making
Issue of 2008‒08‒31
nine papers chosen by

  1. Recognizing a Single-Issue Spatial Election By Vicki Knoblauch
  2. War and Endogenous Democracy By Ticchi, Davide; Vindigni, Andrea
  4. A "Selection Model" of Political Representation By Mansbridge, Jane
  5. Public Choice and the Economic Analysis of Anarchy: A Survey By Powell, Benjamin; Stringham, Edward P.
  6. Fair Collective Choice Rules: Their Origin and Relationship By Yukihiro Nishimura
  7. The Soeharto Era: From Beginning to End By Ross H Mcledo
  8. Big Business Owners in Politics By Pramuan Bunkanwanicha; Yupana Wiwattanakantang
  9. Minimizing the Price of Tranquility: How to Discourage Scotland's Secession from the United Kingdom By Paul Hallwood

  1. By: Vicki Knoblauch (University of Connecticut)
    Abstract: A single-issue spatial election is a voter preference profile derived from an arrangement of candidates and voters on a line, with each voter preferring the nearer of each pair of candidates. We provide a polynomial-time algorithm that determines whether a given preference profile is a single-issue spatial election and, if so, constructs such an election. This result also has preference representation and mechanism design applications.
    Keywords: spatial elections, preference representation, mechanism design
    JEL: D11 D72
    Date: 2008–08
  2. By: Ticchi, Davide (U of Urbino); Vindigni, Andrea (Princeton U)
    Abstract: Many episodes of extension of franchise in the 19th and especially in the 20th century occurred during or in the aftermath of major wars. Motivated by this fact, we offer a theory of political transitions which focuses on the impact of international conflicts on domestic political institutions. We argue that mass-armies, which appeared in Europe after the French Revolution, are an effective military organization only if the conscripted citizens are willing to put effort into fighting wars, which in turn depends on the economic incentives that are provided to them. The need to provide such incentives implies that an oligarchy adopting a mass-army may voluntarily decide to promise some amount of income redistribution to its citizens, conditionally on satisfactory performance as soldiers. When the elite cannot credibly commit to provide an incentive-compatible redistribution, they may cope with the moral hazard problem of the citizen-soldiers only by relinquishing political power to them through the extension of franchise. This is because democracy always implements a highly redistributive fiscal policy, which makes fighting hard incentive-compatible for the citizen-soldiers. We show that a transition to democracy is more likely to occur when the external threat faced by an incumbent oligarchy is in some sense intermediate. A very high external threat allows the elite to make credible commitments of future income redistribution in favor of the citizens, while a limited external threat makes it optimal for the elite not to make any (economic or political) concession to the masses. Some historical evidence consistent with our theory is also provided.
    JEL: D72
    Date: 2007–12
  3. By: Vadlamannati, Krishna Chaitanya
    Abstract: I investigate whether timing of the elections impact economic globalization process or not in India. In other words, do elections slowdown economic globalization process? The theoretical underpinning is that, policies of economic globalization lead to economic and social hardships in short run but benefit the economy in the long run. The motto behind slowing down the economic globalization process before elections is that it leads to polarization of voters and thus negatively affects the incumbent government. I make use of Axel Dreher’s economic globalization index and construct ‘instrumental electoral cycle’ to capture the scheduled and midterm election cycle. Using time series data for India for the period 1970 – 2006, I find that scheduled elections are associated with slow down in economic globalization, whereas midterm elections are not. Replacing Dreher’s economic globalization index with our modified globalization index does not alter the results. I also find that slow down in economic globalization process is responsive to the propinquity to a schedule election year. Meaning, as incumbent government nears the schedule elections, economic globalization process keeps slowing down, while this is exactly opposite during the early years of incumbent government in office. These results suggest that elections generate “electoral globalization cycle” in developing democratic country like India.
    Keywords: Economic globalization; Election cycles; India
    JEL: D72
    Date: 2008–08–23
  4. By: Mansbridge, Jane (Harvard U)
    Abstract: Citizen demands for more accountability and transparency are implicitly grounded in a model of political representation based primarily on sanctions, in which the interests of the representative (in economic terms, the agent) are presumed to conflict with those of the constituent (in economic terms, the principal). A selection model of political representation, as with a selection model of principal-agent relations more generally, is possible when the principal and agent have similar objectives and the agent is already internally motivated to pursue those objectives. If a potential representative’s intrinsic goals (overall direction and specific policies) are those the constituent desires and if the representative also has a verifiable reputation of being both competent and honest, a constituent can select that representative for office and subsequently spend relatively little effort on monitoring and sanctioning. The higher the probability that the objectives of principal and agent may be aligned, the more efficient it is for the principal to invest resources ex ante, in selecting the required type, rather than ex post, in monitoring and sanctioning. A selection model is efficient when agents face unpredictable future decisions, are hard to monitor, and must act flexibly. Accountability through monitoring and sanctioning is appropriate to the sanctions model, narrative accountability and deliberative accountability to the selection model. Normatively, the selection model tends to focus the attention of both citizens and representatives on the common interest. In political science the selection model was advanced in the early 1960s as one of the two paths to constituency control, but after the 1970s was eclipsed by the sanctions model in spite of data seeming to indicate that in many circumstances it has greater predictive power. Economists have only recently begun to apply the selection model significantly to politics.
    Date: 2008–02
  5. By: Powell, Benjamin (Suffolk University, Department of Economics); Stringham, Edward P. (Klagenfurt University)
    Abstract: Public choice economists began studying the economics of anarchy in the 1970s. Since then, the amount of research on anarchy has burgeoned. This article surveys the important public choice contributions to the economics of anarchy. Following the lead of the early public choice economists, many current economists are researching and analyzing how individuals interact without government. From their non-public-interested explanations of the creation of government law enforcement to their historical studies of attempts to internalize externalities under anarchy, public choice scholars are arriving at a more realistic perspective on government and how people interact when government law enforcement is lacking. Although the economics of politics often receives more attention, the economics of anarchy is an important area of research in public choice.
    Keywords: Anarchism; Lawlessness; Order; Internalization of Externalities; Self-Governance
    JEL: D74 H11 K42
    Date: 2008–08–19
  6. By: Yukihiro Nishimura (Yokohama National University and Queen's University)
    Abstract: This paper provides a conceptual framework on fair collective choice rules that synthesizes the studies of Goldman and Sussangkarn (1978) and Suzumura (1981) on the one hand and Tadenuma (2002, 2005) on the other. We show that both frameworks have the following binary relation as a common origin: an allocation x is at least as good as an allocation z if (i) x Pareto dominates z, or (ii) x equity-dominates z. Its transitive-closure and the strict relation derive different ranking criteria, but remarkably, with respect to the maximal elements, they have a set-inclusive relationship.
    Keywords: Welfare Economics, Social Choice, Eciency, Equity, No-Envy
    JEL: D61 D63 D71
    Date: 2008–08
  7. By: Ross H Mcledo
    Abstract: The paper develops a simple model of the Soeharto 'franchise', in which the coercive power of government was deployed in the interests of the president, his family, his business cronies and key officials within the franchise. The franchise prospered by generating rents that could be harvested by, and shared with, insider firms, and by extorting payments from outsider firms and individuals. In this model the franchise inevitably collapses in the long run for various reasons: the level of 'private taxation' from which it prospers eventually becomes intolerable; rents are diluted as franchise membership is expanded to buy off opposition; insider firms grow so rapidly that they run into financial and management bottlenecks; internal discipline declines as members compete for larger shares of the rents. The float of the Thai baht in 1997 merely provided the trigger for this inevitable collapse, while Soeharto's failing health helped to accelerate it.
    Keywords: franchise, Asian crisis, Indonesia, rents, private taxation, bureaucratic extortion
    JEL: O53 P16 P17 D72 D73
    Date: 2008
  8. By: Pramuan Bunkanwanicha; Yupana Wiwattanakantang
    Abstract: This paper investigates a little studied but common mechanism that firms use to obtain state favors: business owners themselves seeking election to top office. Using Thailand as a research setting, we find that the more business owners rely on government concessions or the wealthier they are, the more likely they are to run for top office. Once in power, the market valuation of their firms increases dramatically. Surprisingly, the political power does not influence the financing strategies of their firms. Instead, business owners in top office use their policy-decision powers to implement regulations and public policies favorable to their firms. Such policies hinder not only domestic competitors but also foreign investors. As a result, these politically connected firms are able to capture more market share.
    Date: 2008–08
  9. By: Paul Hallwood (University of Connecticut)
    Abstract: What some view as overly-generous funding of the Scottish parliament results from Scotland.s credible threat to secede from the United Kingdom. Scotland is shown to benefit from a second mover advantage in a non-cooperative sequential game over the allocation of public funds. Various reform proposals are criticized for not recognizing that reform of Scottish government finances must be consistent with Scotland.s credible threat. Fiscal autonomy -- in which the Scottish parliament finances a much greater proportion of its spending from Scottish-sourced taxes, is demonstrated to be a viable reform within the existing political context and, in some circumstances, could remove Scotland.s second mover advantage. We also use a cooperative bargaining game model to demonstrate that an Australian style grants commission would not be a viable reform in the British context.
    Keywords: Barnett formula, cooperative game, fiscal autonomy, fiscal federalism, grants commission, non-cooperative game, public finance, regional finance, Scottish executive, Scottish parliament, secession, vertical balance, United Kingdom, vertical imbalance.
    JEL: H77
    Date: 2008–08

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