nep-pol New Economics Papers
on Positive Political Economics
Issue of 2010‒09‒11
nineteen papers chosen by
Eugene Beaulieu
University of Calgary

  1. Voting when the stakes are high By Gisle James Natvik; Jørgen Juel Andersen; Jon H. Fiva
  2. A Dynamic Politico-Economic Model of Intergenerational Contracts By Lancia, Francesco; Russo, Alessia
  3. Electoral Competition with Uncertainty Averse Parties By Sophie Bade
  4. Political and Public Acceptability of Congestion Pricing: Ideology and Self Interest By Harsman, Bjorn; Quigley, John M.
  5. Broken Promises, Postponed Commitments By Feijó, Rui Graça
  6. Political Instrumentalisation of Islam, Persistent Autocracies, and Obscurantist Deadlock By Jean-Philippe Platteau
  7. Coalitions and networks By Fox, Jonathan A
  8. Political Campaign Spending Limits By Ivan Pastine; Tuvana Pastine
  9. Voting and Information Aggregation in Parliamentary and Semi-Presidential Democracies By Izmirlioglu, Yusuf
  10. Preferences for Redistribution and Pensions: What Can We Learn from Experiments? By Tausch Franziska; Potters Jan; Riedl Arno
  11. Political Culture and Discrimination in Contests By Epstein, Gil S.; Mealem, Yosef; Nitzan, Shmuel
  12. Are Two Economic Instruments Better Than One? Combining Taxes and Quotas under Political Lobbying By Finkelshtain, Israel; Kan, Iddo; Kislev, Yoav
  13. Coping with the Double Legacy of Authoritarianism and Revolution in Portuguese Democracy By Pinto, Antonio Costa
  14. The productivity of trust By Christian Bjørnskov; Pierre-Guillaum Meon
  15. A Comparison between Political Claims Analysis and Discourse Network Analysis: The Case of Software Patents in the European Union By Philip Leifeld; Sebastian Haunss
  16. Informal elite dialogue and democratic control in EU foreign and security policy By Antje Wiener; Uwe Puetter
  17. Women as Policy Makers: Evidence from a Randomized Experiment By Esther Duflo; Raghabendra Chattopadhyay
  18. Can Joe the Plumber Support Redistribution? Law, Social Preferences, and Sustainable Policy Design By Lester, Gillian
  19. Lobbying and the Power of Multinational Firms By Andreas Polk; Armin Schmutzler; Adrian Muller

  1. By: Gisle James Natvik (Norges Bank (Central Bank of Norway)); Jørgen Juel Andersen (Norwegian School of Management); Jon H. Fiva (University of Oslo)
    Abstract: Rational choice theories of electoral participation stress that an individual's decision to vote depends on her expected net benefit from doing so. If this instrumental motive is relevant, then turnout should be higher in elections where more is at stake. We test this prediction, by studying how turnout is affected by exogenous variation in governments' financial exibility to provide pork for their voters. By utilizing simultaneous elections for different offices, we identify a positive effect of election stakes on turnout.
    Keywords: Voter Motivation, Elections, Turnout
    JEL: D72 H71
    Date: 2010–08–30
  2. By: Lancia, Francesco; Russo, Alessia
    Abstract: This paper investigates the conditions for the emergence of implicit intergenerational contracts without assuming reputation mechanisms, commitment technology and altruism. We present a tractable dynamic politico-economic model in OLG environment where politicians play Markovian strategies in a probabilistic voting environment, setting multidimensional political agenda. Both backward and forward intergenerational transfers, respectively in the form of pension benefits and higher education investments, are simultaneously considered in an endogenous human capital setting with labor income taxation. On the one hand, social security sustains investment in public education; on the other hand investment in education creates a dynamic linkage across periods through both human and physical capital driving the economy toward different Welfare State Regimes. Embedding a repeated-voting setup of electoral competition, we find that in a dynamic efficient economy both forward and backward intergenerational transfers simultaneously arise. The equilibrium allocation is education efficient, but, due to political overrepresentation of elderly agents, the electoral competition process induces overtaxation compared with a Benevolent Government solution with balanced welfare weights.
    Keywords: aging; Benevolent Government allocation; intergenerational redistribution; Markovian equilibria; repeated voting.
    JEL: E62 D71 H11 C61
    Date: 2010–07–26
  3. By: Sophie Bade (Max Planck Institute for Research on Collective Goods, Bonn)
    Abstract: The nonexistence of equilibria in models of electoral competition involving multiple issues is one of the more puzzling results in political economics. In this paper, we relax the standard assumption that parties act as expected utility maximizers. We show that equilibria often exist when parties with limited knowledge about the electorate are modeled as uncertainty-averse. What is more, these equilibria can be characterized as a straightforward generalization of the classical median voter result.
    Keywords: Uncertainty Aversion, Multiple Priors, Median Voter, Electoral Competition over many Issues
    JEL: D81 D72
    Date: 2010–05
  4. By: Harsman, Bjorn; Quigley, John M.
    Abstract: Studies of the “stated preferences†of households generally report public and political opposition by urban commuters to congestion pricing. It is thought that this opposition inhibits or precludes tolls and pricing systems that would enhance efficiency in the use of scarce roadways. This paper analyzes the only case in which road pricing was decided by a citizen referendum on the basis of experience with a specific pricing system. The city of Stockholm introduced a toll system for 7 months in 2006, after which citizens voted on its permanent adoption. We match precinct voting records to resident commute times and costs by traffic zone, and we analyze patterns of voting in response to economic and political incentives. We document political and ideological incentives for citizen choice, but we also find that the pattern of time savings and incremental costs exerts a powerful influence on voting behavior. In this instance, at least, citizen voters behave as if they value commute time highly. When they have experienced first-hand the out-of-pocket costs and time-savings of a specific pricing scheme, they are prepared to adopt freely policies that reduce congestion on urban motorways.
    Date: 2010–04–19
  5. By: Feijó, Rui Graça
    Abstract: The First Republic was a short period in Portuguese History which, nevertheless, left deep marks on the social and political tissue of the country. It was marred by instability. The political elite of the time recanted on their defense of "universal suffrage" and thus deprived the regime of a much needed popular base of support. The Second Republic that emerged from the Carnation Revolution instituted a democratic regime based on universal suffrage, and enshrined in its Constitution provisions for popular participation in a much wider scale than it has effectively offered up to the present. This manifests itself in the absence of an effective Regional level of power as well as in poorly endowed municipalities, and is reflected in the lowering of popular confidence in Portuguese Democracy shown in consecutive surveys. The capacity of the Second Republic to develop the principles of democratic participation granted in the Constitution is a test to the present decade, failing what a Third Republic may be looming in the horizon.
    Keywords: Portugal, Republic, Democratic Institutions, Voting Rights, Political Elites, 1910, 1974, Carnation Revolution, Institute European Studies, Portuguese Studies Program
    Date: 2010–05–22
  6. By: Jean-Philippe Platteau
    Abstract: The empirical literature has established a strong link between the fact of being a Muslim-dominated country and indicators of political performance and democracy. This suggests the possible existence of a relation between religion, Islam in this instance, and societal characteristics. Bernard Lewis and others have actually argued the case for such a relation, pointing to aspects of the Islamic religion and culture that make the advent of democracy especially difficult. These arguments fall into the general idea of the Clash of civilisations put forward by Samuel Huntington. In this paper, we discuss this sort of argument and show that there is a systematic misconception about the true nature of the relationship between Islam and politics: far from being merged into the religious realm, politics tends to dominate religion. Because of the particular characteristics of Is-lam, namely, the lack of a centralised religious authority structure and the great variability of interpretations of the Islamic law, there is a risk of an obscurantist deadlock in the form of a vicious process whereby both the ruler and his political opponents try to outbid each other by using the religious idiom. This risk looms particularly large in crisis situations accentuated by international factors.
    Date: 2010–04–15
  7. By: Fox, Jonathan A
    Abstract: Coalitions are partnerships among distinct actors that coordinate action in pursuit of shared goals. But what distinguishes them from other kinds of partnerships? The term is widely used to describe joint ventures in a wide range of arenas, most notably in international geopolitics or political party competition and governance. The literature on coalitions is dominated by discussions of war and peace, election campaigns, and parliamentary dynamics. Just as in war or politics, successful collective action in civil society often depends on the formation and survival of coalitions – insofar as the whole is often greater than the sum of the parts.
    Keywords: Globalization and Regulation, Social Movements
    Date: 2009–12–01
  8. By: Ivan Pastine (University College Dublin); Tuvana Pastine (Economics,Finance and Accounting National University of Ireland,)
    Abstract: Political campaign spending ceilings are purported to limit the incumbent’s ability to exploit his fundraising advantage. If the challenger does not have superior campaign effectiveness, in contrast to conventional wisdom, we show that the incumbent always benefits from a limit as long as he has an initial voter disposition advantage, however small and regardless of the candidates’ relative fundraising ability. If the challenger has higher campaign spending effectiveness, the effect of limits may be non-monotonic. If the incumbent enjoys a mild initial voter disposition advantage, a moderate limit benefits the challenger. Further restricting the limit favours the incumbent. Stricter limits may lead to the unintended consequence of increased expected spending.
    Keywords: Campaign Finance Legislation, Spending Cap, Expenditure Limit, Incumbency Advantage, Efficiency in Fundraising, Effectiveness of Campaign Spending, Initial Voter Disposition, All Pay Auction, Contest, Preferential Treatment Auction.
    Date: 2010
  9. By: Izmirlioglu, Yusuf
    Abstract: This paper investigates legislation in parliamentary and semi-presidential democracies where the legislature and the president have formal role in legislation. A proposed law is first voted in the legislature and if it passes, comes to the consideration of the president. I study two prevalent legislative procedures: (i) Single-round legislation where the president's action is final, (ii) Two-round legislation the president's approval enacts the law but after his veto proposal returns to the legislature for rediscussion. In this setup I examine power balance and the efficiency of information aggregation. For this I build a model of strategic voting with incomplete information and analyze different ideological profiles of the president and the homogenous legislature. The president seems powerless in two-round legislation but in equilibrium there are instances he can change the legislation result. Power struggle arises only when the legislature is modernist and the president is conservative. If the legislature is conservative and the president is modernist, the president has no impact on the outcome, but adversely affects informational efficiency. If they have the same ideological bias, the presidential institution is beneficial and the president's existence provides full information aggregation with finite legislature size in single-round legislation. Above results can be generalized to heterogeneous legislature with two types, except full information aggregation is never achieved.
    Keywords: Voting; Information aggregation efficiency; Ideological bias; Power; Unicameral; Parliamentary; Semi-presidential; Democracy
    JEL: D78 D72 D82
    Date: 2010–02–18
  10. By: Tausch Franziska; Potters Jan; Riedl Arno (METEOR)
    Abstract: Redistribution is an inevitable feature of collective pension schemes and economic experiments have revealed that most people have a preference for redistribution that is not merely inspired by self-interest. Interestingly, little is known on how these preferences interact with preferences for different pension schemes. In this paper we review the experimental evidence on preferences for redistribution and suggest some links to redistribution through pensions. For that purpose we distinguish between three types of situations. The first deals with distributional preferences behind a veil of ignorance. In the second type of situation, individuals make choices in front of the veil of ignorance and know their position. Finally, we discuss situations in which income is determined by interdependent rather than individual choices. In the closing parts of the paper we discuss whether and how these experimental results speak to the redistribution issues of pensions. For example, do they argue for or against mandatory participation? Should we have less redistribution and more actuarial fairness? How does this depend on the type of redistribution involved?Keywords: redistribution, fairness, pension, insurance, experiment
    Keywords: public economics ;
    Date: 2010
  11. By: Epstein, Gil S. (Bar-Ilan University); Mealem, Yosef (Netanya Academic College); Nitzan, Shmuel (Bar-Ilan University)
    Abstract: Many economic and political decisions are the outcome of strategic contests for a given prize. The nature of such contests can be determined by a designer who is driven by political considerations with a specific political culture. The main objective of this study is to analyze the effect of political culture and of valuation asymmetry on discrimination between the contestants. The weights assigned to the public well-being and the contestants’ efforts represent the political culture while discrimination is an endogenous variable that characterizes the mechanism allocating the prize. We consider situations under which the optimal bias of the designer is in favor of the contestant with the larger or smaller prize valuation and examine the effect of changes in the political culture and in valuation asymmetry on the designer's preferred discrimination between the contestants. Focusing on the two most widely studied types of contest success functions (deterministic all-pay-auctions and logit CSFs), we show that an all-pay auction is always the preferred CSF from the point of view of the contest designer. This result provides a new political-economic micro foundation to some of the most commonly used models in the contest literature.
    Keywords: political culture, discrimination, contests, logit contest success function, all-pay-auction
    JEL: H0
    Date: 2010–08
  12. By: Finkelshtain, Israel; Kan, Iddo; Kislev, Yoav
    Abstract: Direct commands, market based, or combined, whichever is the government's mean of intervention, is expected to raise political lobbying and pressure. This study offers a political-economic model of an industry, which is regulated by an integrated system of both direct and market based policies. The model is used for a normative theoretical analysis and as a basis for a structural econometric framework. Exploiting a unique data set that describes the regulations of irrigation water in Israel during the mid eighties by means of quotas and prices, the political and technological parameters of the model are structurally estimated and used to assess the relative efficiency of quotas, prices and integrated regulation regimes.
    Keywords: Political Economy, Natural Resources, Water, Political Economy, D72,
    Date: 2010
  13. By: Pinto, Antonio Costa
    Abstract: Comparative research on democratisation suggests the political space for the immediate punishment of previous dictatorships depends on the type of transition and the correlative power-sharing and veto capacity of the political actors and institutions. We argue here that the type and diversity of transitional justice in Portugal’s democratisation must be correlated not only with the absence of the veto capacity of former authoritarian elites and institutions, due to their collapse, but mainly with the cleavages opened by democratisation and military intervention in politics. We also argue that the nature of the transition is superimposed on the nature of the authoritarian regime and the extent of its legacy in the type of transitional justice, and that the transition’s powerful dynamic served to constitute another legacy for the consolidation of democracy, strongly counterbalancing those of the authoritarian regime.
    Keywords: Democratization, Purges, Transitional Justice, Portugal
    Date: 2010–07–05
  14. By: Christian Bjørnskov; Pierre-Guillaum Meon
    Abstract: This paper returns to one of the early questions of the literature on social trust, whether trust affects total factor productivity (TFP). Using both development and growth accounting, we find strong evidence of a causal effect of trust on the level and growth of TFP. Using a three-stage least-squares procedure, we moreover observe that the effect of trust on TFP runs entirely through property-rights institutions and not political institutions. Those findings resist a series of robustness checks.
    Keywords: Total factor productivity; Social trust
    JEL: Z13
    Date: 2010–08
  15. By: Philip Leifeld (Max Planck Institute for Research on Collective Goods, Bonn); Sebastian Haunss (Department of Politics and Management, University of Konstanz)
    Abstract: The study of policy discourse comprises actor-centered and content-oriented approaches. We attempt to close the gap between the two kinds of approaches by introducing a new methodology for the analysis of political discourse called Discourse Network Analysis. It is based on social network analysis and qualitative content analysis and takes an entirely relational perspective. Political discourse can be analyzed in a dynamic way, and the approach makes previously unobservable cleavage lines and alignments measurable at the actor level, at the level of the contents of a discourse, and a combined layer. We compare discourse network analysis with political claims analysis, a competing method, and apply both methods to the European-level discourse on software patents. Our results demonstrate how an anti-softwarepatent coalition was mobilized and how it gained control over important frames, while the well-organized pro-software-patent discourse coalition was not able to gain sovereignty over the discourse.
    Keywords: Software Patents, Intellectual Property Rights, Discourse Network Analysis, Social Network Analysis, Political Discourse, Policy Networks, Public Policy Analysis, Social Movements, Political Claims Analysis
    Date: 2010–05
  16. By: Antje Wiener; Uwe Puetter
    Keywords: CFSP/ESDP; democracy
    Date: 2010–08–15
  17. By: Esther Duflo; Raghabendra Chattopadhyay
    Abstract: This paper uses political reservations for women in India to study the impact of women’s leadership on policy decisions. In 1998, one third of all leadership positions of Village Councils in West Bengal were randomly selected to be reserved for a woman: in these councils only women could be elected to the position of head. Village Councils are responsible for the provision of many local public goods in rural areas. Using a data set we collected on 165 Village Councils, we compare the type of public goods provided in reserved and unreserved Villages Councils. We show that women invest more in infrastructure that is directly relevant to the needs of rural women (water, fuel, and roads), while men invest more in education. Women are more likely to participate in the policy-making process if the leader of their village council is a woman. [Working Paper No. 001]
    Keywords: Gender, Decentralization, Affirmative action, Political Economy
    Date: 2010
  18. By: Lester, Gillian
    Abstract: This article explores how to build political support for law reform designed to achieve economic redistribution. Specifically, I analyze and compare reforms that aim to redistribute by targeting benefits at low-income individuals through an income or means test, versus those that emphasize “universal†allocation of benefits, not conditioned on poverty. I argue that notwithstanding that we should expect universal provision (by definition) to achieve less redistribution than means testing, universalist policies ultimately may be more effective in achieving this goal because they are likely to be more politically durable, and–more intriguingly—to create social conditions that increase toleration for redistribution. I support this argument by drawing upon the growing body of research in psychology and economics suggesting that people have a mixture of self-regarding and other-regarding impulses, and that some forms of social organization are more likely than others to elicit pro-social behavior. Universalist programs, I argue, plausibly increase preferences for redistribution by tapping social norms of reciprocity, generating group identity effects based on a sense of common vulnerability, and serving as a “policy frame†that de-emphasizes the salience of low-income people as an undeserving “out-group.†I use a case study of recent social insurance legislation as a springboard for developing an empirical research agenda that would help evaluate the strength of my thesis. The analysis offered by this article has implications for contemporary intellectual debates in such areas as tax policy, public finance, behavioral law and economics, distributive justice, law and psychology, health law.
    Date: 2010–02–22
  19. By: Andreas Polk (Berlin School of Economics and Law); Armin Schmutzler (Socioeconomic Institute, University of Zurich); Adrian Muller (Socioeconomic Institute, University of Zurich)
    Abstract: Are national or multinational firms better lobbyists? This paper analyzes the extent of national environmental regulation when policy is determined in a lobbying game between a government and firm. We compare the resulting regulation levels for national and multinational firms. We identify three countervailing forces, the easier-to-shut-down effect, the easier-to-curb-exports effect and the multiple-plant effect. The interplay of these three forces determines whether national or multinational firms produce more, depending on such parameters as the potential environmental damages, transportation costs and the in uence of the firm. We also show that welfare levels are higher with multinational firms than with national firms when there is no lobbying, but that lobbying can reverse the welfare ordering.
    Keywords: Multinational enterprises, regulation, policy formation, lobbying, interest groups, foreign direct investment
    JEL: D72 F23 L51
    Date: 2010–08

This nep-pol issue is ©2010 by Eugene Beaulieu. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.