nep-pol New Economics Papers
on Positive Political Economics
Issue of 2014‒08‒16
twelve papers chosen by
Eugene Beaulieu
University of Calgary

  1. You Can Go Your Own Way: Explaining Partisan Support for Independence By Tim Willems
  2. Political Determinants of the Extensive and Intensive Margins of International Arms Transfers By Florian Johannsen; Inmaculada Martínez-Zarzoso
  3. Political Budget Cycles Revisited, the Case for Social Capital By Kouvavas, Omiros
  4. Resolving rent-seeking puzzles: A model of political influence via social signals By Cameron K Murray
  5. Influence Vs. Utility in the Evaluation of Voting Rules: A New Look at the Penrose Formula By Le Breton, Michel; Van Der Straeten, Karine
  6. Politically Sustainable Probabilistic Minority Targeting By De Donder, Philippe; Peluso, Eugenio
  7. Providing global public goods: Electoral delegation and cooperation By Kocher, Martin G.; Tan, Fangfang; Yu, Jing
  8. Social norms on rent seeking and preferences for redistribution By Sabatini, Fabio; Sarracino, Francesco; Yamamura, Eiji
  9. The Contractarian Constitutional Political Economy of James Buchanan By Roger D. Congleton
  10. The Effect of the Decentralization Degree on Corruption: A New Interpretation By Maria Rosaria Alfano; Anna Laura Baraldi; Claudia Cantabene
  11. Private Agenda and Re-Election Incentives By Rivas, Javier
  12. Special and Differential Treatment of Developing Countries in the WTO By Paola Conconi; Carlo Perroni

  1. By: Tim Willems
    Abstract: This paper analyzes secessions through the lens of representative democratic institutions and considers the incentives of partisan political parties to support independence movements.� It points out that, if anything, separatists should expect to receive support from exactly the "unlike-minded" political party - the reason being that this party might see a break-up as an opportunity to reshape the electorate towards its own preferences.� By doing so, a party could increase its future probability of being elected, while it is also able to shift the entire political spectrum towards its own partisan ideal.� The model is able to explain much of what is currently going on in the debate on Scottish independence, while it can also be applied to issues of political integration (the European Union) and territorial conflicts (think of Ukraine and Russia in relation to Crimea, as well as the situation in Israel).
    Keywords: Nations, Secession, Territorial conflict, Probabilistic voting
    JEL: D72 H77
    Date: 2014–08–07
  2. By: Florian Johannsen (University of Goettingen / Germany); Inmaculada Martínez-Zarzoso (University of Goettingen / Germany)
    Abstract: The main aim of this paper is to investigate the political determinants of international arms transfers. We distinguish between the decision to exports arms (extensive margin) and the value of the arms exported (intensive margin). A theoretically-justified gravity model of trade augmented with political factors is estimated using a two-stage panel-data approach for 104 exporting countries over the period 1950 to 2007. As main political factors the level of democracy in the trading partners as well as the political orientation of the ruling governments are considered. Furthermore we account for the political differences between trading partners, the political environment differences in their respective regions and the existence of military pacts. The main results indicate that political closeness between countries is an important determinant of transfers in arms and that economic and strategic interests are not the only drivers of the transfers.
    Keywords: arms trade, political factors, democracy, conflict, gravity model, military pacts
    JEL: F14 F51
  3. By: Kouvavas, Omiros
    Abstract: Recent literature on Political Budget Cycles has provided appealing evidence that their existence is conditional to country specific characteristics. In this paper we hypothesize that the level of social capital prevailing in a country might be an underlying fundamental reason that might be driving these results. We provide strong evidence that political budget cycles are only present in low social capital countries by utilizing a large panel data set for 63 democratic countries. We also show that the political budget cycles occur both in developing and developed countries under low social capital. Simultaneously, our results are robust under most other conditional effects considered by the literature. Finally, we also propose a theoretical model of conditional capital budget cycles by adapting a moral hazard model to account for different distributions of social capital.
    Keywords: Political Budget Cycles; Political Processes; Trust; Social Capital;
    JEL: D72 E02 E32 E62 H60
    Date: 2013–06–20
  4. By: Cameron K Murray (School of Economics, The University of Queensland)
    Abstract: The empirical observations of underinvestment, loyalty and inequality of access to rent-seeking activities are theoretical puzzles. Drawing on the concepts of power, trust and signals, a new model of political influence via trust-signalling agents is developed. This ‘trust-signalling’ model generates a much richer set of predictions about the market for political influence, resolves the three identified puzzles, and offers a number of testable predictions.
    Date: 2014–04–15
  5. By: Le Breton, Michel; Van Der Straeten, Karine
    Abstract: In this paper, we clarify the relationship between influence/power measurement and utility measurement, the most popular two social objective criteria used when evaluating voting mechanisms. For one particular probabilistic model describing the preferences of the electorate, the so-called Impartial Culture (IC) model used by Banzhaf, the Penrose formula show that the two objectives coincide. The IC probabilistic model assumes that voter preferences are independent. In this article, we prove a general version of the Penrose formula, allowing for correlations in the electorate. We show that in that case, the two social objectives no longer coincide, and qualitative conclusions can be very different.
    Keywords: Power measurement, Voting, Random electorates
    JEL: D71 D72
    Date: 2014–07
  6. By: De Donder, Philippe; Peluso, Eugenio
    Abstract: We show that a transfer targeting a minority of the population is sustained by majority voting, however small the minority targeted, when the probability to receive the transfer is decreasing and concave in income. We apply our framework to the French social housing program and obtain that empirically observed departures from these assumptions are small enough that a majority of French voters should support a positive size of this program. We also provide a su¢ cient condition on this probability function under which more targeting results in a lower equilibrium size of the transfer system.
    Keywords: Paradox of redistribution, A program for the poor is a poor program, majority voting, social housing in France.
    JEL: D72 H53 I38
    Date: 2014–07–18
  7. By: Kocher, Martin G.; Tan, Fangfang; Yu, Jing
    Abstract: This paper experimentally examines the effect of electoral delegation on providing global public goods shared by several groups. Each group elects a delegate who can freely decide on each group member’s contribution (including the contribution of herself) to the global public good. Our results show that people mostly vote for delegates who assign equal contributions for every group member. However, in contrast to standard theoretical predictions, unequal contributions across groups drive cooperation down over time, and it decreases efficiency by almost 50% compared to the benchmark. This pattern is not driven by delegates trying to exploit their fellow group members, as indicated by the theory – quite to the opposite, other-regarding preferences and a re-election incentives guarantee that delegates assign equal contributions for all group members. Since the source of the resulting inefficiency is the polycentric nature of global public goods provision together with other-regarding preferences, we use the term Pinefficiency to describe our finding.
    Keywords: Global Public Goods; Delegation; Cooperation; Experiment
    JEL: C92 D72 H41
    Date: 2014–07–24
  8. By: Sabatini, Fabio; Sarracino, Francesco; Yamamura, Eiji
    Abstract: Empirical studies have shown that preferences for redistribution are significantly correlated with expectations of future mobility and the belief that society offers equal opportunities. We add to previous research by investigating the role of individual and social norms on rent seeking. We find that the individual propensity for stigmatizing rent seeking significantly and positively affects preferences for redistribution. On the other hand, living in an area where most citizens do not stigmatize rent seeking, makes men more favourable to redistribution, which may be seen as a social equalizer in an unfair society that does not offer equal opportunities to all. This effect does not hold for women, whose preference for redistribution is negatively associated to the regional tolerance of rent seeking.
    Keywords: redistribution, welfare state, civic values, social norms, social capital
    JEL: D31 D39 D63 D64 D72 H26 Z13
    Date: 2014–07–07
  9. By: Roger D. Congleton (West Virginia University, College of Business and Economics)
    Abstract: This paper attempts to outline and summarize the main body of work on one strand of James Buchanan's work, constitutional political economy. The grounding ideas and inferences of Buchanan's approach can be summarized as follows: (a) The appropriate method for analyzing and understanding social phenomena is the individual. (b) There are often mutual gains that can only be realized through collective action. (c) Collective action produces both property right systems (civil law) and collective decision-making systems (political constitutions). (d) One cannot know beforehand the ex-act consequences of rules, nor can one read the minds of those affected by those rules. (e) Every individual counts, so the legitimacy of collective action can only be assured by decision procedures grounded in unanimity. (f) Every agreement that meets the unanimity criteria is, by definition, an improvement. (g) However, the legitimacy of collective action in general and constitutional governance in particular requires that individuals be fundamentally equal in their roles as citizens, both at the constitutional level of choice and in the civil society framed by the constitution chosen. This paper shows how these ideas emerged in Buchanan's research and are used to develop a very rich constitutional political economy.
    Date: 2013–09
  10. By: Maria Rosaria Alfano (Seconda Università di Napoli, Italy); Anna Laura Baraldi (Seconda Università di Napoli, Italy); Claudia Cantabene (Seconda Università di Napoli, Italy)
    Abstract: This work contributes to empirical studies on decentralization and corruption by trying to resolve the uncertainty that the literature so far has shown. It also gives reasons supporting the ‘best’ decentralization structure which a country can adopt to discourage corrupt behaviour, and suggests an intermediate degree of decentralization. The trade-off between the moral hazard and the adverse selection aspect of the principal-agent framework, that emerges in this literature, can be better captured by a non-linear specification (e.g. cubic, as the more general non-linear model); neither very small nor very high degrees of decentralization are appropriate against corruption, but an intermediate one. Being monitored by the voters, local politicians, in a intermediate decentralized setting, have an incentive to perform in the voters’ interest and, being local resources they manage not very much, they have little incentive to appropriate? part of such resources for personal use.
    Keywords: Corruption, Decentralization
    JEL: H7 D73 C33
    Date: 2014–07
  11. By: Rivas, Javier
    Date: 2013
  12. By: Paola Conconi; Carlo Perroni
    Abstract: Rules on special and differential treatment (SDT) constitute the centerpiece of the WTO's strategy for integrating developing countries into the world trading system. We examine the theoretical rationale for SDT when trade liberalization in developing countries is impeded by a policy commitment problem. We show that SDT rules, if reconciled with the principle of reciprocity, can help developing countries to reduce trade barriers and improve their trading prospects.
    Keywords: Trade agreements, S&,D rules, commitment, reciprocity
    JEL: D72 D78 F13
    Date: 2014–05

This nep-pol issue is ©2014 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.