nep-pol New Economics Papers
on Positive Political Economics
Issue of 2008‒08‒06
eleven papers chosen by
Eugene Beaulieu
University of Calgary

  1. Votes and Violence: Evidence from a Field Experiment in Nigeria By Paul Collier; Pedro C. Vicente
  2. Corruption and Political Interest: Empirical Evidence at the Micro Level By Benno Torgler; Bin Dong
  3. Turned Off or Turned Out? Campaign Advertising,Information, and Voting By Daniel Houser; Rebecca Morton; Thomas Stratmann
  4. A Model of Sovereign Debt in Democracies By Ali Alichi
  5. Enlargement and common external tariff in a political-economic model of customs union By Subhayu Bandyopadhyay; Sajal Lahiri; Suryadipta Roy
  6. Inequality and size of the government when voters have other regarding preferences By Sanjit Dhami; Ali al-Nowaihi
  7. Accountability in Government and Regulatory Policies: Theory and Evidence By Carmine Guerriero
  8. Contributing or Free-Riding? A Theory of Endogenous Lobby Formation By Hideo Konishi; Taiji Furusawa
  9. Satisfaction with Democracy and Collective Action Problems: The Case of the Environment By Halla, Martin; Schneider, Friedrich; Wagner, Alexander F.
  10. The Political Economy of Incentive Regulation: Theory and Evidence from US States By Carmine Guerriero
  11. Information aggregation & strategic abstention in large laboratory elections By Battaglimi, Marco; Morton, Rebecca; Palfrey, Thomas

  1. By: Paul Collier (University of Oxford); Pedro C. Vicente (University of Oxford)
    Abstract: Following the wave of democratization during the 1990s, elections are now common in low-income societies. However, these elections are frequently flawed. We investigate the Nigerian general election of 2007, which is to date the largest election held in Africa and one seriously marred by violence. We designed and conducted a nationwide field experiment based on randomized anti-violence grassroots campaigning. We find direct effects on violence outcomes from exploring both subject-surveying and independent data sources. Crucially, we establish that voter intimidation is effective in reducing voter turnout, and that the violence was systematically dissociated from incumbents. We suggest that incumbents have a comparative advantage in alternative strategies, vote buying and ballot fraud. Voter intimidation may be a strategy of the weak analogous to terrorism.
    Keywords: Violence, Conflict, Electoral Politics, Political Economy, Randomized Experiment, Field Experiment, Nigeria, West Africa
    JEL: D72 D74 O55 P16
    Date: 2008–06
  2. By: Benno Torgler (Queensland University of Technology); Bin Dong (Queensland University of Technology)
    Abstract: The topic of corruption has recently attracted a great deal of attention, yet there is still a lack of micro level empirical evidence regarding the determinants of corruption. Furthermore, the present literature has not investigated the effects of political interest on corruption despite the interesting potential of this link. We address these deficiencies by analyzing a cross-section of individuals, using the World Values Survey. We explore the determinants of corruption through two dependent variables (perceived corruption and the justifiability of corruption). The impact of political interest on corruption is explored through three different proxies, presenting empirical evidence at both the cross-country level and the within-country level. The results of the multivariate analysis suggest that political interest has an impact on corruption controlling for a large number of factors.
    Keywords: Corruption, Political Interest, Social Norms
    JEL: K42 D72 O17 J24
    Date: 2008–04
  3. By: Daniel Houser (Interdsciplinary Center for Economic Science, George Mason University); Rebecca Morton; Thomas Stratmann
    Abstract: We present results from laboratory experimental elections in which voter information is endogenously provided by candidates and voting is voluntary. We also compare advertisements that are costless to voters with those that reduce voter payoffs. We fi?nd that informative advertisements increase voter participation and thus informative campaign advertising "turns out" voters. However, the effect of information is less than that found in previous experimental studies where information is exogenously provided by the experimenter. Furthermore, we find that when advertising by winning candidates reduces voter payoffs, informed voters are less likely to participate, thus are "turned off" rather than "turned out."Finally, we discover that candidates tend to overadvertise, and contrary to theoretical predictions, advertise significantly more when voting is voluntary than when it is compulsory.
    Keywords: Voting, Campaign Finance, Abstention, Voter Turnout, Experiments
    Date: 2008–07
  4. By: Ali Alichi
    Abstract: This paper develops and empirically tests a political economy model of sovereign debt. The main incentive for repaying sovereign debt is to maintain access to international capital markets. However, in a democracy, one generation may choose default regardless of its consequences for future generations. An old generation with little concern for its country's access to capital markets can force a default on debt if it has the majority of voters. On the other hand, if the younger generation is more numerous, it can force repayment of previously defaulted debt. Other voter heterogeneities, such as in income, can generate similar results.
    Keywords: Working Paper , Sovereign debt , International capital markets , Political economy , Economic models , Data analysis ,
    Date: 2008–06–23
  5. By: Subhayu Bandyopadhyay; Sajal Lahiri; Suryadipta Roy
    Abstract: We present a model with three blocks of nations: two of the blocks are members of a Customs Union (CU) and maintain a common external tariff (CET) on the third (non member). One of the member blocks is a block of new entrants. The producing lobby is assumed to be union-wide and lobbies governments of both blocks to influence the CET. The CET is determined jointly by the CU. We follow the political support function approach, where the CU seeks to maximize a weighted sum of the constituents? payoff functions. In this framework, we find the relationship between the CET and the average level of capital stock owned by the protected sector in the block of new entrants. We find that the CET is unambiguously larger if the new entrants have a larger stock of capital.
    Keywords: Tariff
    Date: 2008
  6. By: Sanjit Dhami; Ali al-Nowaihi
    Abstract: The celebrated relation between inequality and redistribution is based on selfish voters who care solely about own-payoffs. A growing empirical literature highlights the importance of other regarding preferences (ORP) in voting over redistribution. We reexamine the relation between inequality and redistribution, within a simple general equilibrium model, when voters have ORP. Our contribution is five-fold. First, we demonstrate the existence of a Condorcet winner. Second, poverty can lead to increased redistribution (which implies a countercyclical social spending to GDP ratio). Third, we show that disposable income 'strongly median-dominates' factor income. Fourth, we show that fair voters respond to an increase in 'strong median-dominance' by engaging in greater redistribution. Fifth, an illustrative empirical exercise using OECD data points to the importance of fairness in explaining redistribution.
    Keywords: Redistribution; Other regarding preferences; Single crossing property; Income inequality; Difference dominance; Median dominance; American Exceptionalism.
    JEL: D64 D72 D78
    Date: 2008–07
  7. By: Carmine Guerriero (University of Cambridge)
    Abstract: This paper analyzes the political economy of regulatory and judicial appointment rules. I study a model of price-setting by a political principal faced with a firm with unknown costs, and endowed with an information-gathering technology whose efficiency rises with the effort exerted by two accountable supervisors (a regulator and a judge). This set-up captures the institutions of several international markets. The model predicts that reforms toward election rather than appointment of regulators are more likely the less efficient is the information-gathering technology, the less stringent are the investment concerns of society, the stronger are regulators’ revolving-door motivations, and the closer is political competition. These predictions are consistent with US electric power market data. Moreover, in accordance with the model, electricity rates are lower and respond less to shock in input costs in states that elect their regulators or their High Court judges.
    Keywords: Election, Agency, Judges, Regulation, Electricity
    JEL: K23 L51 Q43
    Date: 2008–06
  8. By: Hideo Konishi (Boston College); Taiji Furusawa (Hitotsubashi University)
    Abstract: We consider a two-stage public goods provision game: In the first stage, players simultaneously decide if they will join a contribution group or not. In the second stage, players in the contribution group simultaneously offer contribution schemes in order to influence the government’s choice on the level of provision of public goods. Using perfectly coalition-proof Nash equilibrium (Bernheim, Peleg and Whinston, 1987 JET), we show that the set of equilibrium outcomes is equivalent to an "intuitive" hybrid solution concept, the free-riding-proof core, which is always nonempty but does not necessarily achieve global efficiency. It is not necessarily true that an equilibrium lobby group is formed by the players with highest willingness-to-pay, nor is it a consecutive group with respect to their willingnesses-to-pay. We also show that the equilibrium level of public goods provision shrinks to zero as the economy is replicated.
    Keywords: Common Agency, Public Good, Free Rider, Core, Lobby, Coalition Formation, Coalition-proof Nash Equilibrium
    JEL: C71 C72 F13 H41
    Date: 2008–03
  9. By: Halla, Martin (University of Linz); Schneider, Friedrich (University of Linz); Wagner, Alexander F. (University of Zurich)
    Abstract: Using modern methods for analyzing multi-level data, we find that, by and large, citizens of OECD countries are more satisfied with the way democracy works in their country if more environmental policies are in place and if environmental quality is higher. We also document that parents care about carbon dioxide emissions more than non-parents and that those with a high willingness to pay for environmental quality deplore intervention through government policies.
    Keywords: satisfaction with democracy, environmental economics and policy, collective action problems
    JEL: K32 P16 Q21 Q28
    Date: 2008–07
  10. By: Carmine Guerriero (University of Cambridge)
    Abstract: The determinants of incentive regulation are a key issue in industrial policy. I study an asymmetric information model of incentive rules selection by a political principal endowed with an information-gathering technology whose efficiency increases with the effort exerted by two accountable supervisors (a regulator and a judge). This set up captures the institutions of several international markets. The model predicts that reforms toward higher powered rules are more likely the more inefficient (efficient) is the production (information-gathering) technology, the less tight is political competition and the greater are pro-consumer supervisors’ incentives. This prediction is consistent with evidence based on US electric power market data.
    Keywords: Incentive Schemes, Accountability Rules, Regulatory Capture
    JEL: D73 H11 L51 K2
    Date: 2008–04
  11. By: Battaglimi, Marco; Morton, Rebecca; Palfrey, Thomas

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