Channeling the Say in Political Decision Bodies

69 Pages Posted: 25 Sep 2014

See all articles by Hans Gersbach

Hans Gersbach

ETH Zurich - CER-ETH -Center of Economic Reseaarch; IZA Institute of Labor Economics; CESifo (Center for Economic Studies and Ifo Institute); Centre for Economic Policy Research (CEPR)

Stephan Imhof

ETH Zürich - CER-ETH - Center of Economic Research at ETH Zurich

Oriol Tejada

ETH Zürich - CER-ETH - Center of Economic Research at ETH Zurich

Date Written: September 2014

Abstract

We examine optimal procedures for public project provision, financing, and redistribution in democracy. We consider a large and heterogeneous decision body and show that first-best outcomes are obtained by a procedure that involves two proposal-making rounds, the right of the minority to move first, and a ban on subsidies for the agenda-setters. We explore the robustness of the result and consider applications of our rules. For instance, the result rationalizes those rules of democracies that grant minorities in the electorate or in parliament the right to initiate collective decisions on new project proposals. We further show that the above procedure constitutes the unique minimal form of political competition that ensures first-best outcomes.

Keywords: constitutional design, majority rule, public project provision, subsidies

JEL Classification: D72, H40

Suggested Citation

Gersbach, Hans and Imhof, Stephan and Tejada, Oriol, Channeling the Say in Political Decision Bodies (September 2014). CEPR Discussion Paper No. DP10154. Available at SSRN: https://ssrn.com/abstract=2501637

Hans Gersbach (Contact Author)

ETH Zurich - CER-ETH -Center of Economic Reseaarch ( email )

Zürichbergstrasse 18
Zurich, 8092
Switzerland
+41 44 632 82 80 (Phone)
+41 44 632 18 30 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Stephan Imhof

ETH Zürich - CER-ETH - Center of Economic Research at ETH Zurich ( email )

Zürichbergstrasse 18
Zurich, 8092
Switzerland

Oriol Tejada

ETH Zürich - CER-ETH - Center of Economic Research at ETH Zurich ( email )

Zürichbergstrasse 18
Zurich, 8092
Switzerland
41446329693 (Phone)

HOME PAGE: http://www.cer.ethz.ch/mip/people/toriol

Register to save articles to
your library

Register

Paper statistics

Downloads
0
Abstract Views
327
PlumX Metrics