Separation of Powers, Political Competition and Efficient Provision of Public Goods

30 Pages Posted: 27 Apr 2009 Last revised: 19 Dec 2010

See all articles by Aristotelis Boukouras

Aristotelis Boukouras

University of Leicester

Kostas Koufopoulos

University of Warwick - Finance Group

Date Written: April 13, 2009

Abstract

In this paper we provide a political game where agents decide whether to become legislators or politicians. Legislators determine the political institutions constraining politicians' behavior and politicians compete for gaining the power to make decisions about the level of the public good. We derive a number of interesting results: i) Political competition is a necessary but not a sufficient condition for the elimination of political rents. ii) Agents utilize the separation of powers in order to endogenously select institutions which restrict the power of politicians. iii) In conjunction with political competition, these institutions implement the Lindahl allocation in the economy as a sub-game perfect Nash equilibrium of the political game. iv) As a consequence of the previous result, political rents are zero in equilibrium, in the sense that the politician in government does not extract part of the social surplus because of his power. To the best of our knowledge, this in the only citizen-candidate model with this equilibrium property.

Keywords: Lindahl allocation, political competition, voting games

JEL Classification: D02, D62, D72, H41

Suggested Citation

Boukouras, Aristotelis and Koufopoulos, Kostas, Separation of Powers, Political Competition and Efficient Provision of Public Goods (April 13, 2009). Available at SSRN: https://ssrn.com/abstract=1394942 or http://dx.doi.org/10.2139/ssrn.1394942

Aristotelis Boukouras (Contact Author)

University of Leicester ( email )

University Road
Leicester, LE1 7RH
United Kingdom

Kostas Koufopoulos

University of Warwick - Finance Group ( email )

Gibbet Hill Rd
Coventry, CV4 7AL
Great Britain

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