nep-pol New Economics Papers
on Positive Political Economics
Issue of 2006‒10‒21
eight papers chosen by
Eugene Beaulieu
University of Calgary

  1. Ex Interim Voting in Public Good Provision By Sven Fischer; Andreas Nicklisch
  2. Informative Voting and the Samuelson Rule By Felix Bierbrauer; Marco Sahm
  3. The Looks of a Winner: Beauty, Gender and Electoral Success By Berggren, Niclas; Jordahl, Henrik; Poutvaara, Panu
  4. Measuring the pro-poorness of income growth within an elasticity framework By Essama-Nssah B.; Lambert, Peter J.
  5. Firm Size, Economic Situation and Influence Activities By Matthias Kräkel
  6. Economie politique de la politique d'ouverture commerciale mixte : interactions entre les groupes sociaux et l'Etat By Pierre-Olivier Peytral
  7. Economic Liberalization and Rural Land and Labour Markets in India: A Study By Gandhi Vasant P.
  8. Haggling for Rents, Relational Contracts, and the Theory of the Firm By Oliver Gürtler

  1. By: Sven Fischer (Max Planck Institute of Economics, Jena); Andreas Nicklisch (Max Planck Institute for Research on Collective Goods, Bonn)
    Abstract: We report the results of an experimental study that compares voting mechanisms in the provision of public goods. Subjects can freely decide how much they want to contribute. Whether the public good is finally provided is decided by a referendum under full information about all contributions. If provision is rejected, contributions are reduced by a fee and reimbursed. We compare unanimity with majority voting and both to the baseline of cheap talk. Contributions are highest under unanimity. Yet, results concerning overall efficiency are mixed. When provision occurs, only unanimity enhances efficiency. Overall, however, unanimity leads to too many rejections.
    Keywords: Experimental economics, learning, minimal social situation, myopia
    JEL: D83 D84
    Date: 2006–09
  2. By: Felix Bierbrauer (Max Planck Institute for Research on Collective Goods, Bonn); Marco Sahm (Lehrstuhl fuer Finanzwissenschaft, Munich, Germany.)
    Abstract: We study the classical free-rider problem in public goods provision in a large economy with uncertainty about the average valuation of the public good. Individual preferences over public goods are shaped by a skill and a taste parameter. We use a mechanism design approach to solve for the optimal utilitarian provision rule. The relevant incentive constraints for information aggregation ensure that individuals be-have as if they were engaging in informative voting over the level of public good provision. It is shown that the use of information by an optimal provision rule is inversely related to the polarization of preferences which results from the properties of the skill distribution.
    Keywords: information aggregation, informative voting, public goods, two-dimensional heterogeneity
    JEL: H41 D71 D72 D82
    Date: 2006–08
  3. By: Berggren, Niclas (The Ratio Institute); Jordahl, Henrik (Research Institute of Industrial Economics); Poutvaara, Panu (University of Helsinki)
    Abstract: We study the role of beauty in politics. For the first time, focus is put on differences in how women and men evaluate female and male candidates and how different candidate traits relate to success in real and hypothetical elections. We have collected 16,218 assessments by 2,772 respondents of photos of 1,929 Finnish political candidates. Evaluations of beauty explain success in real elections better than evaluations of competence, intelligence, likability, or trustworthiness. The beauty premium is larger for female candidates, in contrast to findings in previous labor-market studies.
    Keywords: Beauty; Gender; Elections; Political candidates; Beauty premium
    JEL: D72 J45 J70
    Date: 2006–10–12
  4. By: Essama-Nssah B.; Lambert, Peter J.
    Abstract: Poverty reduction has become a fundamental objective of development, and therefore a metric for assessing the effectiveness of various interventions. Economic growth can be a powerful instrument of income poverty reduction. This creates a need for meaningful ways of assessing the poverty impact of growth. This paper follows the elasticity approach to propose a measure of pro-poorness defined as a weighted average of the deviation of a growth pattern from the benchmark case. The measure can help assess pro-poorness both in terms of aggregate poverty measures, which are members of the additively separable class, and at percentiles. It also lends itself to a decomposition procedure, whereby the overall pattern of income growth can be unbundled, and the contributions of income components to overall pro-poorness identified. An application to data for Indonesia in the 1990s reveals that the amount of poverty reduction achieved over that period remains far below what would have been achieved under distributional neutrality. This conclusion is robust to the choice of a poverty measure among members of the additively separable class, and can be tracked back to changes in expenditure components.
    Keywords: Pro-Poor Growth and Inequality,Population Policies,Services & Transfers to Poor,Inequality,Rural Poverty Reduction
    Date: 2006–10–01
  5. By: Matthias Kräkel (University of Bonn, Adenauerallee 24-42, D-53113 Bonn, Germany, Tel: +49 228 733914, Fax: +49 228 739210.
    Abstract: This paper discusses the optimal firm size in the presence of influence activities, and the level of individual rent-seeking dependent on the economic situation of the firm. Since firm size has a discouraging effect on the level of individual rent-seeking but also a quantity effect as the number of rent-seekers increases, the interplay of both effects determines whether the employer chooses an inefficiently small or large firm size. In the given setting, a bad economic situation leads to both a higher probability of a substantial loss and a reduction of productivity. The productivity effect and the two other effects together determine the optimal level of individual rent-seeking.
    Keywords: economic situation, firm size, influence activities, politicking, rent-seeking
    JEL: D2 L2 M2
    Date: 2006–10
  6. By: Pierre-Olivier Peytral (LEPII - Laboratoire d'Economie de la Production et de l'Intégration Internationale - [CNRS : FRE2664] - [Université Pierre Mendès-France - Grenoble II])
    Abstract: L'analyse de la politique commerciale dans le modèle Hecksher-Ohlin-Samuelson (HOS) conclut à la supériorité du libre-échange sur la protection compte tenu de ses effets sur l'économie nationale. Cette contribution propose de donner une explication au paradoxe auquel fait face cette conclusion théorique : la permanence historique des mesures simultanées de libre-échange et de protection sélective. Ce paradoxe constitue le sujet d'analyse d'un courant théorique d'économie politique : l'économie politique de la politique d'ouverture commerciale. L'objet est d'expliciter les différents déterminants endogènes de cette politique (groupes sociaux, gouvernement et bureaucratie), politique qualifiée de politique d'ouverture commerciale mixte. Les approches expliquant les différents déterminants endogènes sont présentées successivement pour aboutir à la conclusion que ce sont les interactions entre les groupes sociaux, la bureaucratie et le gouvernement qui permettent de comprendre les choix effectifs de politique.
    Keywords: politique commerciale ; économie politique ; protectionnisme ; libre-échange ; gouvernement ; Etat ; modèle Hecksher-Ohlin-Samuelson
    Date: 2006–10–09
  7. By: Gandhi Vasant P.
    Abstract: The paper examines the rural land and labour markets in the context of economic liberalization in India. Land and labour are the two fundamental resources available to the rural people for income generation. The access to land and to employment for labour become basic determinants of well-being for the rural households. Reforms are often seen as hostile to rural areas and the poor, although they should be beneficial not only for overall growth, but also rural growth and poverty alleviation. The study based on primary household data examines the land and labour markets in the reform period and the underlying linkages of these to different characteristics of the household. The study finds that over the reform period in India the land markets are leading to less landlessness rather than more, and growth in marginal and medium farm sizes rather than large. Lease markets are leading to operated land in more hands. Land purchase behaviour is related to less land, more education, greater crop diversification, and higher crop and livestock revenues. Leasing-in is also related to many of the same variables and is showing great diversity in lease agreements involving outputs, inputs and rent. Labour-employment is showing diversity of occupations but the primary dependence on agriculture is still about 80 percent. There has been some change in the occupational structure. Non-farm employment is associated with higher overall employment. Own-farm employment is strongly related to crop diversification and livestock activity; other farm employment to number of male and female family members and irrigation; and non-farm employment to education. Broadly, liberalization does not show adverse consequences but rather some positive impact on rural land and labour markets.
    Date: 2006–09–29
  8. By: Oliver Gürtler (Department of Economics, BWL II, University of Bonn, Adenauer-allee 24-42, D-53113 Bonn, Germany. Tel.:+49-228-739214, Fax:+49-228-739210.
    Abstract: In this paper, a formal rent-seeking theory of the firm is developed. The main idea is that integration (compared to non-integration) facilitates rent-seeking for the integrating party, but makes it harder for the integrated one. In a one-period model, this implies that the rent-seeking contest becomes more uneven and the parties rent-seek less. Here, integration is optimal. In the infinitely-repeated version of the model, it is also possible for the parties to enter a relational contract, under which each promises not to engage in rent-seeking. Such a contract must be self-enforcing, for it cannot be enforced by court. It is shown that integration makes the relational contract less easily sustainable, as, due to its cost advantage, the integrating party gains more from deviating than any party under non-integration. Hence, integration is preferred, if relational contracts are not sustainable, while, otherwise, non-integration may well be preferred. Moreover, it is shown that the model’s predictions are in line with many empirical facts on the choice of ownership structures.
    Keywords: Integration, non-integration, relational contracts, rent seeking
    JEL: D23 D72 D74 L14 L22
    Date: 2006–10

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