nep-pol New Economics Papers
on Positive Political Economics
Issue of 2011‒03‒12
eleven papers chosen by
Eugene Beaulieu
University of Calgary

  1. Democracy, Property Rights, Income Equalilty, and Corruption By Bin Dong; Benno Torgler
  2. Net Campaign Contributions, Agricultural Interests, and Votes on Liberalizing Trade with China By John Gilbert; Reza Oladi
  3. The Political Economy of Policy Instrument Choice: Theory and Evidence from Agricultural Policies By Johan F.M.Swinnen; Alessandro Olper; Thijs Vandemoortele
  4. Social Cohesiveness and gender Role Attitudes By VALENTOVA Marie
  5. Preferences for Redistribution and Pensions: What Can We Learn from Experiments? By Tausch Franziska; Potters Jan; Riedl Arno
  6. One Share-One Vote: New Empirical Evidence By Eklund , Johan; Poulsen, Thomas
  7. An optimal Voting System when Voting is costly By Bognar, Katalin; Börgers, Tilman; Meyer-ter-Vehn, Moritz
  8. Miscounts, Duverger's Law and Duverger's Hypothesis By Matthias Messner; Mattias K. Polborn
  9. Corruption, Institutions and Regulation By Michael Breen; Robert Gillanders
  10. Multi-stakeholder governance for effectively sharing social responsibility 1 (social contracts, deliberative democracy and endogenous conformity) By Lorenzo Sacconi
  11. Cultural Explanations of Electoral Reform: A Policy Cycle Model By Norris, Pippa

  1. By: Bin Dong (QUT); Benno Torgler (QUT)
    Abstract: This paper presents theoretical and empirical evidence on the nexus between corruption and democracy. We establish a political economy model where the effect of democracy on corruption is conditional on income distribution and property rights protection. Our empirical analysis with cross-national panel data provides evidence that is consistent with the theoretical prediction. Moreover, the effect of democratization on corruption depends on the protection of property rights and income equality which shows that corruption is a nonlinear function of these variables. The results indicate that democracy will work better as a control of corruption if the property right system works and there is a low level of income inequality. On the other hand if property rights are not secured and there is strong income inequality, democracy may even lead to an increase of corruption. In addition, property rights protection and the mitigation of income inequality contribute in a strong manner to the reduction of corruption.
    Keywords: Corruption; Democracy; Income inequality; Property rights
    JEL: D73 H11 P16
    Date: 2010–11–26
  2. By: John Gilbert (Department of Economics and Finance, Utah State University); Reza Oladi
    Abstract: We consider the potential influence of contributions from interest groups to political rivals in the voting behavior of US legislators on international trade policy issues. Our application addresses the determinants of the Permanent Normal Trade Relations with China decision, and focuses particular attention on the agriculture/agribusiness lobby. A simultaneous voting-net contributions model suggests that these contributions were very effective relative to organized labor and other corporate groups, despite their relatively small dollar value. Possible explanations arising from differences in targeting strategies are explored.
    Keywords: Trade policy, agricultural political economy, binary choice models, China
    JEL: D72
    Date: 2011–01–20
  3. By: Johan F.M.Swinnen; Alessandro Olper; Thijs Vandemoortele
    Abstract: We study the political economy of instrument choice in agricultural and food policies. After a review of the historical evolution of European agricultural price and trade policy instruments since 1880, we develop a political economy model of instrument choice. The key predictions of the model suggest a rational explanation of instrument choice patterns, based on the trade-off between the different cost components of the policies, and internal and external political constraints. An empirical analysis supports the main predictions of the theoretical model. We find that the GATT/WTO agreement had a significant impact.
    Keywords: Political Economy; Instrument Choice; Agricultural Policy, GATT, WTO
    JEL: D78 Q18
    Date: 2011
  4. By: VALENTOVA Marie
    Abstract: The main aims of the present paper are to examine whether gender role attitudes mitigate or facilitate social cohesiveness of Luxembourg residents and to uncover whether this effect is moderated by gender. Social cohesiveness is measured by composite indicators: first two represent general dimensions of social cohesiveness (behavioural and attitudinal) and the remaining five stand for specific domains of the concept (institutional trust, solidarity, socio-cultural participation, political participation and social relations). Attitudes toward gender are operationalized into three indicators: childcare, homemaking and economic relations. The outcomes of the analysis reveal that traditional attitudes, mainly those regarding homemaking, have a mixed impact on social cohesiveness. On the one hand, being more traditional increases attitudinal level of cohesiveness, i.e. institutional trust and solidarity. On the other hand, it seems to negatively affect cohesiveness at behaviour level, concretely in the intensity of socio-cultural relations and political participation. Gender appears to moderate the effect of gender role attitudes on political participation and solidarity, implying that traditional attitudes decrease the level of these type of cohesiveness more among women than among men.
    Keywords: gender roles; social cohesion; attitudes; multidimensional concepts
    JEL: D63 Z13
    Date: 2011–02
  5. By: Tausch Franziska; Potters Jan; Riedl Arno (METEOR)
    Abstract: Redistribution is an inevitable feature of collective pension schemes. It is still largely an open question what people‘s preferences are regarding redistribution—both through pensions schemes as well as more generally. It would seem that economists have little to say about this question, as they routinely assume that people are predominantly selfish. Economic experiments have revealed, however, that most people do in fact have redistributional preferences that are not merely inspired by self-interest. This paper reviews this experimental evidence. For that purpose we distinguish between three fundamentally different types of situations. The first deals with distributional preferences behind a veil of ignorance. What type of income distribution do people prefer when they do not know whether they will end up in an advantaged or disadvantaged position? A main result here is that, contrary to what John Rawls suggested, people do not prefer the maximin rule, but rather favor a utilitarian justice concept appended with a safety net for the poorest. Another result is that people are willing to accept income inequalities—as long as these are due to choices for which people can be held accountable. In the second type of situation, individuals make choices in front of the veil of ignorance and know their position. Experiments show that preferences for redistribution are strongly dependent on a person‘s own position. People in a relatively disadvantaged position want more redistribution than those in a relatively advantaged position, which shows that preferences for redistribution are clearly affected by self-interest. Still, even many of those in an advantaged position display a preference forredistribution. This holds, in particular, if inequality is due to chance rather than effort. There are also significant differences in preferences between the genders and between people with different political orientations. Finally, we discuss situations in which income is determined by interdependent rather than individual choices. People are dependent upon the cooperation of others for the achievement of their (income) goals. Experiments show that behavioral factors such as trust and reciprocity play a crucial role, and they also indicate that these factors are strongly affected by the institutional setting. 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: public economics ;
    Date: 2011
  6. By: Eklund , Johan (Jönköping International Business School and Ratio Institute); Poulsen, Thomas (Copenhagen Business School)
    Abstract: Shares with more voting rights than cash flow rights provide their owners with a disproportional influence that is often found to destroy the value of outside equity. This is taken as evidence of discretionary use of power. However, concentration of power does not necessarily result from control enhancing mechanisms; it could also be that some shareholders retain a large block in a one share-one vote structure. In this paper, we develop a methodology to disentangle disproportionality, which allows us to test the effect of deviations from one share-one vote more precisely. Our empirical findings add to the existing literature.
    Keywords: Ownership structure; one share-one vote; proportionality; performance; entrenchment
    JEL: G32 G34
    Date: 2010–10–26
  7. By: Bognar, Katalin; Börgers, Tilman; Meyer-ter-Vehn, Moritz
    Abstract: We consider the design of an optimal voting system when voting is costly. For a private values model with two alternatives we show the optimality of a voting system that combines three elements: (i) there is an arbitrarily chosen default decision and non-participation is interpreted as a vote in favor of the default; (ii) voting is sequential; (iii) not all voters are invited to participate in the vote. We show the optimality of such a voting system by first arguing that it is first best, that is, it maximizes welfare when incentive compatibility constraints are ignored, and then showing that individual incentives and social welfare are sufficiently aligned to make the first best system incentive compatible. The analysis in this paper involves some methods that are new to the theory of mechanism design, and it is also a purpose of this paper to explore these new methods.
    Keywords: Voting; mechanism design; committees.
    JEL: D70
    Date: 2010–10
  8. By: Matthias Messner; Mattias K. Polborn
    Abstract: In real-life elections, vote-counting is often imperfect. We analyze the consequences of such imperfections in plurality and runoff rule voting games. We call a strategy profile a robust equilibrium if it is an equilibrium if the probability of a miscount is positive but small. All robust equilibria of plurality voting games satisfy Duverger's Law: In any robust equilibrium, exactly two candidates receive a positive number of votes. Moreover, robust- ness (only) rules out a victory of the Condorcet loser. All robust equilibria under runoff rule satisfy Duverger's Hypothesis: First round votes vare (almost always) dispersed over more than two alternatives. Robustness has strong implications for equilibrium outcomes under runoff rule: For large parts of the parameter space, the robust equilibrium outcome is unique.
    Date: 2011
  9. By: Michael Breen (Dublin City University); Robert Gillanders (University College Dublin)
    Abstract: We analyze the effects of corruption and institutional quality on the quality of business regulation. Our key findings indicate that corruption negatively affects the quality of regulation and that general institutional quality is insignificant once corruption is con- trolled for. These findings hold over a number of specifications which include additional exogenous historical and geographic controls. The findings imply that policy-makers should focus on curbing corruption to improve regulation, over wider institutional re- form.
    Keywords: Business Regulation; Economic Policy; Institutional Quality; Corruption
    Date: 2011–03–04
  10. By: Lorenzo Sacconi (University of Trento - Department of Economics and EconomEtica, Inter university centre of research University Milano - Bicocca)
    Date: 2011–03
  11. By: Norris, Pippa (Harvard University)
    Abstract: The standard explanation of electoral reform is offered by rational choice accounts. These regard the choice of rules as an elite?level issue, dominated by partisan interests bargaining within the legislature, where citizens are usually marginalized and powerless. Such accounts may help to explain what specific reforms are enacted but they lack the capacity to account satisfactorily for the logically prior questions: when and why are any successful reforms raised on the policy agenda?
    Date: 2010–06

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