nep-cdm New Economics Papers
on Collective Decision-Making
Issue of 2016‒08‒28
seven papers chosen by
Stan C. Weeber, McNeese State University

  1. How Do Voters Matter? Evidence from US Congressional Redistricting By Daniel B. Jones; Randall Walsh
  2. Local Government Proliferation, Diversity, and Conflict By Samuel Bazzi; Matthew Gudgeon
  3. An algorithmic approach to one-round electoral systems By Gutiérrez, José Manuel; Müller, Wolfgang C.
  4. Disentangling the Effect of Private and Public Cash Flows on Firm Value By Cristina Mabel Scherrer; Marcelo Fernandes
  5. Centralization of strategic decisions during the Great Recession: An empirical analysis of European manufacturing firms By Zoltan Bakonyi; Balazs Murakozy
  6. Horizontal and Vertical Tax Interactions in a Common Agency Game By Florence LACHET-TOUYA
  7. Electoral Contributions and the Cost of Unpopularity By Thomas Bassetti; Filippo Pavesi

  1. By: Daniel B. Jones; Randall Walsh
    Abstract: How does the partisan composition of an electorate impact the policies adopted by an elected representative? We take advantage of variation in the partisan composition of Congressional districts stemming from Census-initiated redistricting in the 1990’s, 2000’s, and 2010’s. Using this variation, we examine how an increase in Democrat share within a district impacts the district representative’s roll call voting. We find that an increase in Democrat share within a district causes more leftist roll call voting. This occurs because a Democrat is more likely to hold the seat, but also because – in contrast to existing empirical work – partisan composition has a direct effect on the roll call voting of individual representatives. This is true of both Democrats and Republicans. It is also true regardless of the nature of the redistricting (e.g., whether the redistricting was generated by a partisan or non-partisan process).
    JEL: D72 H0
    Date: 2016–08
  2. By: Samuel Bazzi (Boston University & BREAD); Matthew Gudgeon (Boston University)
    Abstract: The creation of new local governments is a key feature of decentralization in developing countries. This process often causes substantial changes in contestable public resources and the local diversity of the electorate. We exploit the plausibly exogenous timing of new district creation in Indonesia to iden- tify the implications of these changes for violent conflict. Using new geospatial data on violence, we show that allowing for redistricting along group lines can reduce conflict. However, these reductions are undone and even reversed if the newly defined electorates are ethnically polarized, particularly in areas that receive an entirely new seat of government. We identify several mechanisms highlighting the violent contestation of political control.
    Keywords: Conflict, Polarization, Ethnic Diversity, Decentralization
    JEL: D72 D74 H41 H77 O13 Q34
    Date: 2016–03
  3. By: Gutiérrez, José Manuel; Müller, Wolfgang C.
    Abstract: A family of algorithms provides a formalization of how the basic one-round electoral systems – highest average and largest remainders, single transferable vote and single non-transferable vote systems – proceed in transforming votes into seats. In this way, the basic one-round electoral systems are parametrized with the four parameters n (size of the constituency), m (size of the nomination lists), ck (a factor providing the electoral formula) and l (signed election threshold). The parametrization reveals that the most important electoral systems have a common basic structure.
    Keywords: electoral system; algorithm; parametrization
    JEL: D72
    Date: 2016–08–26
  4. By: Cristina Mabel Scherrer (Aarhus University and CREATES); Marcelo Fernandes (Queen Mary University of London and FGV)
    Abstract: This paper presents a simple model for dual-class stock shares, in which common shareholders receive both public and private cash flows (i.e. dividends and any private benefit of holding voting rights) and preferred shareholders only receive public cash flows (i.e. dividends). The dual-class premium is driven not only by the firm's ability to generate cash flows, but also by voting rights. We isolate these two effects in order to identify the role of voting rights on equity-holders' wealth. In particular, we employ a cointegrated VAR model to retrieve the impact of the voting rights value on cash flow rights. We find a negative relation between the value of the voting right and the preferred shareholders' wealth for Brazilian cross-listed firms. In addition, we examine the connection between the voting right value and market and firm specific risks.
    Keywords: Private benefits, Voting right, Dual-class shares
    JEL: G32 G34 G38 G15
    Date: 2016–08
  5. By: Zoltan Bakonyi (Institute of Economics - Centre for Economic and Regional Studies, Hungarian Academy of Sciences PhD student - Corvinus University of Budapest); Balazs Murakozy (Institute of Economics - Centre for Economic and Regional Studies, Hungarian Academy of Sciences)
    Abstract: This study analyzes which types of firm-level shocks were associated with the centralization of strategic decision-making during the recession of 2008-09. We use a unique survey dataset of more than 14000 manufacturing firms from seven European countries which includes direct information on whether the firms centralized or decentralized their strategic decision-making process. Motivated by theoretical approaches claiming that organizations under considerable stress are more likely to centralize, we use multinomial logit models to test whether firms facing a larger fall in turnover, employment, investment or having to postpone their innovations were more likely to change their decision-making process. We find evidence that employment change and postponing innovations are indeed associated with centralization even when we control for ownership, group structure, financing, management, and strategy.
    Keywords: centralization, Europe, recessions
    JEL: M21 D22 D23
    Date: 2016–06
  6. By: Florence LACHET-TOUYA
    Abstract: The decisions made by one government affect the tax revenue that can be collected by the decisionmakers belonging to the same tier of government or by stacked jurisdictions : externalities arise, the existence and the magnitude of which are closely related to the nature of the tax, to the mobility of the base and to the distribution of tax competence among decisionmakers. Indeed, when same authorities belonging to a same level of government derive their receipts from a mobile tax base, a competition mechanism takes place among them that triggers externalities. Likewise, when different layers of decision-makers exert their taxing power upon a common base, the choices made by one tier affect the receipts that the other governments can collect. As a by-product, this paper proposes a model where both horizontal and vertical interactions are tackled, ?first successively then simultaneously. Uncertainty concerning the base, that is, the amount of capital likely to be invested, is introduced and a generalization of taxation schemes is provided. The analysis shows that horizontal and vertical externalities point towards opposite directions : while horizontal competition leads to ine¢ ciently low rates, the common pool problem arising from the stacking of decisionmakers taxing a same base gives rise to a phenomenon of over-taxation. Besides, the combination of both externalities yields to an intermediary tax rate : the outcome is brought closer to the social optimum.
    Keywords: Vertical and horizontal tax externalities; Informational asymmetry; Tax competition; Common Agency; Nonlinear taxes
    JEL: D72 D82 H23 H30 H32 H71 H77
    Date: 2016–08
  7. By: Thomas Bassetti (University of Padova); Filippo Pavesi (Department of Economics (University of Verona))
    Abstract: When considering electoral campaigns, those candidates that receive contributions from relatively unpopular industries should be regarded less favorably by voters that have information on the sources of funding. To offset this unpopularity effect, politicians may either demand more money for campaign advertising from these industries in order to persuade less informed voters, or shy away from unpopular contributors to avoid losing the support of the informed. Our model predicts that the first effect dominates, and that interest groups related to industries that experience a rise (decline) in unpopularity will increase (decrease) the amount of resources devoted to campaign financing. By using a set of alternative identification strategies to assess the impact of unpopularity on contributions for U.S. House elections, we provide robust evidence in favor of our predictions.
    Keywords: Campaign Finance, Interest Groups, Elections, Popularity
    JEL: D72 P16
    Date: 2016–08

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