Public Choice III

by Dennis C. Mueller

• ISBN13: 9780521894753
• ISBN10: 0521894751
• Edition: 3rd
• Format: Paperback
• Copyright: 2003-02-17
• Publisher: Cambridge University Press

Summary

This book represents a considerable revision and expansion of Public Choice II (1989). Six new chapters have been added, and several chapters from the previous edition have been extensively revised. The discussion of empirical work in public choice has been greatly expanded. As in the previous editions, all of the major topics of public choice are covered. These include: why the state exists, voting rules, federalism, the theory of clubs, two-party and multiparty electoral systems, rent seeking, bureaucracy, interest groups, dictatorship, the size of government, voter participation, and political business cycles. Normative issues in public choice are also examined including a normative analysis of the simple majority rule, Bergson-Samuelson social welfare functions, the Arrow and Sen impossibility theorems, Rawls's social contract theory and the constitutional political economy of Buchanan and Tullock.

Table of Contents

Preface	xvii
Introduction	1	(8)
Part I Origins of the state
The reason for collective choice -- allocative efficiency	9	(35)
Public goods and prisoners' dilemmas	9	(5)
Coordination games	14	(2)
Public goods and chickens	16	(2)
Voluntary provision of public goods with constant returns to scale	18	(4)
Voluntary provision of public goods with varying supply technologies	22	(3)
Externalities	25	(2)
The Coase theorem	27	(3)
Coase and the core	30	(2)
A generalization of the Coase theorem	32	(2)
Does the Coase theorem hold without predefined property rights?	34	(1)
Externalities with large numbers of individuals	35	(4)
Externalities with large numbers of individuals -- a second time	39	(1)
Experimental results in the voluntary provision of public goods	40	(4)
The reason for collective choice -- redistribution	44	(23)
Redistribution as insurance	45	(2)
Redistribution as a public good	47	(2)
Redistribution to satisfy fairness norms	49	(2)
Redistribution to improve allocative efficiency	51	(2)
Redistribution as taking	53	(3)
Income transfers in the United States	56	(2)
Redistribution and the distribution of income	58	(3)
Redistribution to special interests	61	(6)
Part II Public choice in a direct democracy
The choice of voting rule	67	(12)
The unanimity rule	67	(5)
Criticisms of the unanimity rule	72	(2)
The optimal majority	74	(2)
A simple majority as the optimal majority	76	(3)
Majority rule -- positive properties	79	(49)
Majority rule and redistribution	79	(5)
Cycling	84	(1)
The median voter theorem -- one-dimensional issues	85	(2)
Majority rule and multidimensional issues	87	(5)
Proof of the median voter theorem -- multidimensional case	92	(2)
Majority rule equilibria when preferences are not defined in spatial terms	94	(1)
Proof of extremal restriction -- majority rule theorem	95	(2)
Restrictions on preferences, on the nature and number of issues, and on the choice of voting rule that can induce equilibria	97	(7)
Preference homogeneity	97	(2)
Homogeneous preferences and qualified majority rules	99	(4)
The relationship between numbers of issues and alternatives and the required majority	103	(1)
Logrolling	104	(4)
Logrolling and cycling	108	(1)
Testing for logrolling	109	(3)
Agenda manipulation	112	(2)
Agenda control in a spatial environment	112	(1)
Agenda control in a divide-the-cake game	113	(1)
Why so much stability?	114	(14)
Issues are indeed of one dimension	115	(1)
Voting one dimension at a time	116	(2)
Logrolling equilibria	118	(2)
Empirical evidence of cycling	120	(3)
Experimental evidence of cycling	123	(5)
Majority rule -- normative properties	128	(19)
Condorcet's jury theorem	128	(5)
May's theorem on majority rule	133	(2)
Proof of May's theorem on majority rule	135	(1)
The Rae-Taylor theorem on majority rule	136	(1)
Assumptions underlying the unanimity rule	137	(1)
Assumptions underlying the two rules contrasted	138	(2)
The consequences of applying the rules to the ``wrong'' issues	140	(4)
Deciding improvements in allocative efficiency via majority rule	140	(3)
Deciding redistribution by unanimity	143	(1)
Conclusions	144	(3)
Simple alternatives to majority rule	147	(12)
The alternative voting procedures defined	147	(1)
The procedures compared -- Condorcet efficiency	148	(3)
The procedures compared -- utilitarian efficiency	151	(1)
The Borda count	152	(4)
Axiomatic properties	152	(2)
The Borda count and the ``tyranny of the majority''	154	(1)
The Borda count and strategic manipulation	155	(1)
Approval voting	156	(1)
Implications for electoral reform	157	(2)
Complicated alternatives to majority rule	159	(23)
The demand-revealing process	160	(9)
The mechanics of the process	160	(8)
Vernon Smith's auction mechanism	168	(1)
Point voting	169	(1)
An explication of the Hylland-Zeckhauser point-voting procedure	170	(4)
Voting by veto	174	(5)
A comparison of the procedures	179	(3)
Exit, voice, and disloyalty	182	(27)
The theory of clubs	183	(3)
Voting-with-the-feet	186	(3)
Global optimality via voting-with-the-feet	189	(5)
Clubs and the core	194	(5)
Voting-with-the-feet: empirical evidence	199	(3)
Voluntary association, allocational efficiency, and distributional equity	202	(2)
The theory of revolution	204	(5)
Part III Public choice in a representative democracy
Federalism	209	(21)
The logic of federalism	209	(4)
The assignment problem	209	(3)
Federalism with geographic representation	212	(1)
Why the size of government may be ``too large'' under federalism	213	(2)
Logrolling	213	(2)
Universalism	215	(1)
Intergovernmental grants under federalism	215	(8)
Intergovernmental grants to achieve Pareto optimality	216	(5)
The empirical evidence on intergovernmental grants	221	(2)
Why the size of government may be ``too large'' and ``too small'' under federalism	223	(4)
The problem of centralization under federalism	227	(3)
Two-party competition -- deterministic voting	230	(19)
Outcomes under two-party democracy	231	(5)
Two-party competition in a constrained policy space	236	(5)
The uncovered set	236	(4)
The uncovered set with high valence issues	240	(1)
Relaxing the assumptions of the Downsian model	241	(2)
Candidates have preferences over policies	241	(1)
Candidates can enter and exit the contests	242	(1)
Testing the median voter hypothesis	243	(3)
Are local public expenditures public or private goods?	246	(3)
Two-party competition -- probabilistic voting	249	(15)
Instability with deterministic voting	249	(3)
Equilibria under probabilistic voting	252	(1)
Normative characteristics of the equilibria	253	(2)
Equilibria with interest groups	255	(2)
An application to taxation	257	(3)
The logic	257	(2)
The evidence	259	(1)
Commentary	260	(4)
Multiparty systems	264	(39)
Two views of representation	264	(1)
Selecting a representative body of legislators	265	(1)
Proportional representation in practice	266	(1)
Electoral rules	266	(5)
The Hare, Droop, Imperiali, d'Hondt, and Sainte-Lague formulas	267	(2)
The single-transferable vote (STV)	269	(1)
Limited voting	270	(1)
Single-nontransferable-vote systems (SNTV)	271	(1)
Electoral rules and the number of parties	271	(5)
Electoral rules and the degree of proportionality	276	(2)
The goals of parties	278	(12)
Coalition theories with a one-dimensional issue space	280	(5)
Coalition theories with two- or more-dimensional issue spaces	285	(1)
The political heart	285	(1)
The dimension-by-dimension median	286	(4)
Cabinet stability	290	(5)
The duration of governments	290	(2)
The death of governments	292	(3)
Summary	295	(1)
Social stability	295	(1)
Strategic voting	296	(2)
Strategic voting under the plurality rule	296	(1)
Strategic voting in multiparty systems	297	(1)
Commentary	298	(5)
The paradox of voting	303	(30)
The rational voter hypothesis	304	(4)
Expected utility maximization	304	(2)
A taste for voting	306	(1)
Voting as a game of cat and mouse	306	(1)
The rational voter as minimax-regret strategist	307	(1)
The rational voter hypothesis: the evidence	308	(12)
The expressive voter hypothesis	320	(2)
The ethical voter hypothesis	322	(3)
Ethical preferences as selfish behavior	325	(1)
The selfish voter	326	(3)
Summary and implications	329	(4)
Rent seeking	333	(26)
The theory of rent seeking	333	(10)
The basic rent-seeking model with a fixed number of players	335	(1)
Diminishing or constant returns, r ≤ 1	336	(1)
Increasing returns with 1 < r ≤ 2	336	(1)
Increasing returns with r > 2	337	(1)
The impact of free entry	337	(1)
Rent seeking with sequential investments	338	(2)
Relaxing the assumptions	340	(1)
Risk-neutrality	340	(2)
Rent seeking among groups	342	(1)
Rent seeking when the probability of winning is not defined logistically	342	(1)
Designing rent-seeking contests	342	(1)
Rent seeking through regulation	343	(4)
Rent seeking and the political process	347	(1)
Rent seeking through tariffs and quotas	348	(6)
The economic effects of tariffs, quotas, and voluntary export restraints	348	(2)
Endogenous protection models	350	(3)
Remaining puzzles	353	(1)
Rent seeking in other governmental activities	354	(1)
How large are the welfare losses from rent seeking?	355	(4)
Bureaucracy	359	(27)
Uncertainty, information, and power	360	(2)
The budget-maximizing bureaucrat	362	(3)
Environment and incentives	362	(1)
The model	363	(2)
Extensions of the model	365	(3)
Alternative institutional assumptions	365	(3)
Bargaining between sponsor and bureau	368	(1)
Alternative behavioral assumptions	368	(3)
The slack-maximizing bureaucrat	368	(2)
The risk-avoiding bureaucrat	370	(1)
Empirical tests	371	(9)
Power of the agenda setter	371	(2)
Cost differences between publicly and privately provided services	373	(7)
The government as Leviathan	380	(4)
Theory	380	(2)
Empirical testing -- government expenditures and taxes	382	(2)
Conclusions	384	(2)
Legislatures and bureaucracies	386	(20)
The Congressional-dominance model	386	(2)
Congressional dominance through administrative structure	386	(2)
Congressional dominance through administrative procedure	388	(1)
The impact of uncertainty and transaction costs	388	(3)
Uncertainty and the locus of responsibility	389	(1)
Uncertainty, transaction costs, and commitment	389	(2)
Congress and the president	391	(8)
The legislature controls the president	391	(2)
Presidential control over the legislature	393	(2)
The problem of deadlocks	395	(4)
Congress, the president, and the judiciary	399	(2)
Adding the judiciary to the model	399	(1)
The goals of the judiciary	399	(2)
Legislative decision making in the European Union	401	(4)
Conclusions	405	(1)
Dictatorship	406	(23)
The origins of dictatorship	407	(2)
The goals of dictators	409	(3)
The consumption of the dictator	409	(2)
Power	411	(1)
Security	411	(1)
The functioning and survival of dictatorships	412	(5)
The utility-maximizing dictator	412	(1)
Tin pots and totalitarians	413	(1)
Selective strategies to survive	414	(2)
The dictator's dilemma	416	(1)
The limits of totalitarianism	417	(1)
The rise and decline of dictatorships	417	(3)
Dictatorship and economic performance	420	(4)
The relative advantages of dictatorship and democracy	420	(2)
The relative economic performance of dictatorships and democracies	422	(2)
A direct test of Wintrobe's model of dictatorship	424	(1)
Conclusions	424	(5)
Part IV Applications and testing
Political competition and macroeconomic performance	429	(43)
Macroeconomic performance and political success	429	(8)
Vote and popularity functions	429	(4)
Whom do voters hold responsible?	433	(4)
Opportunistic politics	437	(3)
With myopic voters	438	(1)
With rational voters	439	(1)
Partisan politics	440	(6)
Partisan politics with retrospective voters	443	(1)
Partisan politics with rational, forward-looking voters	444	(2)
The evidence	446	(13)
Do politicians try to manipulate the macroeconomic environment?	446	(1)
Are there partisan biases?	447	(4)
Which theories fit the data best?	451	(4)
Additional evidence for the Alesina/Rosenthal model	455	(1)
Discussion	456	(3)
Voter behavior	459	(2)
Myopic, retrospective, rational	459	(1)
Sociotropic or egotropic	460	(1)
Politics and inflation	461	(5)
Hypotheses	461	(1)
The facts	462	(3)
Central bank independence	465	(1)
Deficits	466	(3)
The facts	466	(1)
Hypotheses	466	(1)
Fiscal illusion and Keynesian delusions	466	(1)
Political business cycles	467	(1)
Partisan effects	467	(1)
Government paralysis	467	(1)
Budgetary rules	468	(1)
The evidence	468	(1)
Reflections	469	(3)
Interest groups, campaign contributions, and lobbying	472	(29)
The logic of collective action	473	(2)
Models of interest group behavior in politics	475	(6)
Informative campaigning in a Downsian model	476	(1)
Persuasive campaigning in a Downsian model	477	(4)
Empirical studies of the causes and consequences of campaign contributions	481	(15)
Votes for a candidate are a function of campaign expenditures	481	(5)
Determinants of campaign contributions	486	(3)
Determinants of representative voting behavior -- campaign contributions	489	(1)
Determinants of representative voting behavior -- ideology or pure survival	489	(4)
Evaluation	493	(3)
Lobbying	496	(1)
The welfare effects of interest group activities	497	(4)
The size of government	501	(34)
The facts	501	(5)
Explanations for the size and growth of government	506	(24)
The government as provider of public goods and eliminator of externalities	506	(1)
``Taste variables''	507	(2)
Income	509	(1)
The Baumol effect	510	(1)
The government as redistributor of income and wealth	511	(1)
The Meltzer and Richard model	512	(2)
Additional redistribution--growth-of-government hypotheses	514	(1)
Some logical/empirical difficulties with the redistribution--growth-of-government hypothesis	515	(1)
Direct empirical tests of the redistribution--government-size hypothesis	516	(3)
Interest groups and the growth of government	519	(4)
Bureaucracy and the growth of government	523	(4)
Fiscal illusion	527	(2)
Tax elasticity	529	(1)
Conclusions	530	(5)
Government size and economic performance	535	(28)
The welfare losses from taxation	536	(3)
Government size and black market activity	539	(5)
Government size and corruption	544	(1)
Government size and economic productivity	545	(3)
Government size and economic growth	548	(6)
Methodological issues	548	(3)
The evidence	551	(3)
Government activity and the economic decline of nations	554	(5)
The logic	554	(2)
Empirical evidence	556	(3)
Conclusions	559	(4)
Part V Normative public choice
Social welfare functions	563	(19)
The Bergson-Samuelson social welfare function	563	(5)
Axiomatic social welfare functions	568	(10)
Fleming's social welfare function	568	(1)
Harsanyi's social welfare function	569	(2)
Two criticisms of Harsanyi's social welfare function	571	(1)
Should individual attitudes toward risk count?	571	(1)
Can individuals agree on a value for W?	572	(3)
Ng's social welfare function	575	(1)
Nash's and other multiplicative social welfare functions	576	(2)
What form of social welfare function is best?	578	(4)
The impossibility of a social ordering	582	(15)
Logic of the proof	583	(2)
Relaxing the postulates	585	(7)
Transitivity	586	(3)
Unrestricted domain	589	(1)
Independence of irrelevant alternatives	590	(2)
Strategy-proof social welfare functions	592	(3)
Implications for public choice	595	(2)
A just social contract	597	(18)
The social contract	598	(1)
The two principles of justice	599	(3)
Extensions of the theory to other political stages	602	(1)
Critique of the Rawlsian social contract	603	(6)
The social contract	603	(4)
The two principles of justice	607	(2)
Experimental evidence	609	(1)
Two utilitarian defenses of the maximin principle	609	(3)
Maximin as a means to obtain compliance	609	(2)
Maximin as a redistribution principle	611	(1)
The social contract as a constitution	612	(3)
The constitution as a utilitarian contract	615	(28)
The constitutional context	616	(1)
The two-action case	617	(2)
The constitutional contract	619	(5)
Optimal collective action with only identity uncertainty	620	(2)
Optimal collective action with identity and numbers uncertainty	622	(2)
Optimal collective action with identity, numbers, and payoff uncertainty	624	(1)
Symmetric and asymmetric bans and obligations	624	(1)
Continuous actions with interdependent utilities	625	(2)
Decision-making costs	627	(4)
Prisoners' dilemmas	628	(3)
Direct conflicts	631	(1)
Rights and obligations	631	(3)
Constitutions: contracts or conventions?	634	(5)
Constitutions as contracts	634	(2)
Constitutions as conventions	636	(1)
Discussion	637	(2)
Conclusions regarding two-stage theories of social choice	639	(1)
From the normative, two-stage theory of constitutions to hypothesis testing	640	(3)
Liberal rights and social choices	643	(14)
The theorem	643	(1)
Resolving the paradox	644	(6)
Rights over Pareto	644	(2)
Pareto trades of actions	646	(2)
Pareto trades of rights	648	(2)
Rights over social states versus rights over actions	650	(1)
Liberal rights and obligations	651	(1)
Constitutional rights and liberal rights	652	(5)
Part VI What have we learned?
Has public choice contributed anything to the study of politics?	657	(18)
The failures of rational actor models of politics	658	(1)
The rational choice approach to modeling	659	(3)
The prediction of cycling	662	(1)
The predictions of spatial models	663	(3)
Predicting voting and free-riding	666	(2)
Can public choice contribute to the positive study of political institutions?	668	(2)
Has public choice contributed anything to the normative study of political institutions?	670	(1)
Conclusions	671	(4)
Allocation, redistribution, and public choice	675	(8)
References	683	(66)
Name index	749	(14)
Subject index	763