Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/30740
Authors: 
Gersbach, Hans
Year of Publication: 
2010
Series/Report no.: 
CESifo working paper 2939
Abstract: 
In this paper we examine the potential of democratic constitutions for the provision of divisible public goods in a large economy. Our main insights are as follows: When aggregate shocks are absent, the combination of the following rules yields first-best allocations: a supermajority rule, equal taxation, exemption of the agenda setter from taxation, and a ban on subsidies. In the presence of aggregate shocks to benefits or to costs of public-good provision, tax-sensitive majority rules, where the size of the required majority depends on the aggregate tax revenues, yield first-best allocations if a monotonicity condition is met. Finally, we explore the potential of first-best constitutions to induce voluntary participation by compensating agents belonging to the minority.
Subjects: 
democratic constitutions
tax-sensitive majority rules
constitutional rules
provision of public goods
JEL: 
D62
D72
H40
Document Type: 
Working Paper

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