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http://hdl.handle.net/10419/54759
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| Title: | | Legislative bargaining and the dynamics of public investment  |
| Authors: | | Battaglini, Marco Nunnari, Salvatore Palfrey, Thomas |
| Issue Date: | | 2011 |
| Series/Report no.: | | Discussion papers // Wissenschaftszentrum Berlin für Sozialforschung, Schwerpunkt Märkte und Politik: Abteilung Verhalten auf Märkten SP II 2011-205 |
| Abstract: | | We present a legislative bargaining model of the provision of a durable public good over an infinite horizion. In each period, there is a societal endowment which can either be invested in the public good or consumed. We characterize the optimal public policy, defined by the time path of investment and consumption. In each period, a legislature with presentatives of each of n districts bargain over the current period's endowment for investment in the public good and transfers to each district. We analyze the Markov perfect equilibrium under different voting q-rules where q is the number of yes votes required for passage. We show that the efficiency of the public policy is increasing in q because higher q leads to higher investment in the public good and less pork. We examine the theoretical equilibrium predictions by conducting a laboratory experiment with fiveperson committees that compares three alternative voting rules: unanimity (q=5); majority (q=3); and dictatorship (q=1). |
| Subjects: | | dynamic political economy voting public goods bargaining experiments |
| JEL: | | D71 D72 C78 C92 H41 H54 |
| Document Type: | | Working Paper |
| Appears in Collections: | | Publikationen von Forscherinnen und Forschern des WZB Discussion Papers, Abteilung Verhalten auf Märkten, WZB
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